Before developing a financial recovery plan, what is the first step to take?

The first step in developing a financial recovery plan is to track spending and assess your current financial situation. This foundational step is crucial because it provides a clear understanding of your income, expenses, debts, and overall financial health. By knowing where your money is going, you can identify areas for improvement, prioritize your spending, and make informed decisions about how to move forward with your recovery plan.

Without this assessment, you might make decisions based on assumptions rather than actual data, which can lead to ineffective strategies and unmet financial goals. Tracking your spending allows you to see patterns that can be adjusted, ensuring that subsequent steps, such as consulting a financial advisor or creating a budget, are based on a solid understanding of your financial circumstances.