Most of us have never properly learned how to manage our own finances well. Schools generally don’t teach you about how to run your personal budget, you might learn how to run a businesses finances if you do a business course, but generally nothing about your own.
This has become apparent in the amount of personal debt levels in society. Cheap credit is easy to obtain which has made it simple for people to borrow much more than they can afford to pay back.
There is nothing wrong with borrowing money, there are numerous ways to raise some extra cash when you need it, like Logbook loans or credit cards and other types of person loan. But you need to make sure that you borrow what you can afford, even if it’s sometimes tempting not to.
So how can you manage your finances effectively?
List your income and expenditure so you know exactly what you have coming in and going out each month. To some people it can be quite daunting knowing what your finances are, but it is better than burying your head in the sand and will improve your finances in the long term.
Make sure you aren’t paying over the odds for your monthly bills. Gas, electricity and broadband prices can be compared online and you can easily switch to cheaper providers. If you have a mortgage on your home you might be able to re-mortgage to get a better interest rate.
If you have debt on credit cards make sure you shop around for the best rates. Choose a 0% finance card that runs for a decent period of time so you only need to pay off the balance on the card and don’t pay any interest. You can then switch to another 0% card when that deal runs out if you haven’t paid off the balance in full.
By making small savings on your monthly bills this can add up and give you a bit of extra cash each month to pay other bills or save.
Keep a diary
If you don’t keep track of what you are spending it’s easy to run up debts quickly. Keep a diary of everything that you spend, it doesn’t have to be difficult. There are apps you can download on to your mobile phone that allow you to input everything you spend. You can enter your monthly spending limits and the app will tell you how much more you can spend and when you have reached your limit.
If you want to save money, set a goal for the amount you want to save. This will motivate you to achieve that. Set one big goal which is a large amount and then incremental milestones until you reach that large amount.
When it comes to budgeting you need to be realistic with the goals that you are setting yourself. If your monthly shopping bill is normally a certain amount, don’t assume you will easily be able to cut it back. You might be surprised at how many essentials you will need.
It is often best to assume that you spend more than you think when you are putting your budget together. This could mean you will be left with more money than you thought, rather than less. There are always unexpected expenses that come up that are almost impossible to budget for. Make sure that you factor these into any budget you create.
Managing your personal finances can be simple if you are organised. Be strict with yourself and it will pay off in the end when you are left with improved finances.