How To Be Money Wise In Managing Your Spending
Money doesn’t guarantee you happiness, but we can’t get by in life without it. Many people live in worry over their finances, with the constant fear of the next utility bill arriving. If we don’t have the reserves in our bank account, we are going to find it difficult to pay. Therefore, it is important to save money where we can, in preparation for any unexpected costs that can happen in our day to day life.
If you are struggling financially, don’t ignore the fact but seek professional advice. Otherwise, follow this handy guide to help you manage your money.
Track your expenses
The best way to manage your money is to know where it goes each month. Recording your expenses will give you an idea of the areas where you can save money. You can download a financial template online, or you can simply sit down with a pen and paper and make your own expense tracker. Consider all your spending, including your bills, food, subscriptions, debt, travel costs, etc. Keep your receipts for everything you purchase and add them to your expense tracker. Use your bank statements to help you work out anything else you spend.
When you know where your money is going, you will understand where you need to cut back on your spending.
Budget your money
Now you know how much money you are spending, make a budget plan to help you organize your spending each month. Consider what is important and what isn’t. For example, you need to put food on your table, but there are ways to shop economically. You may enjoy the occasional takeout, but how much of that is eating into your budget. We need to be wise in our spending, and sometimes that means not giving into temptation. Admittedly, it sucks when you can’t afford something you really want, but that is where effective money management and saving come into play.
Avoid impulse spending
We can often look dreamily at the latest in technology flooding our high street stores, from the most recent 4K television to top end music systems. We can also spend time in our local supermarket and tell ourselves we need a treat or two, so put items into our shopping baskets that we know we can’t really afford. Whether it’s an expensive purchase or a small one, we can buy something impulsively, and ignore the possible consequences.
If you want something you can’t afford, don’t buy it. Many stores allow you to pay for items monthly, but you need to be sure you can keep up with the payment plan. Failure to do so will lead you to trouble down the line, so think carefully before you make a purchase. As with most things in life, if you really do want something, you need to work at it by saving your money until you can afford it. You don’t want further expenses each month, and buying something with money you have saved will give you more satisfaction and less worry, even if you have to wait a little while longer to get it.
Avoid long-term debt
You may already have debts to pay, so you don’t want to add to them. However, if there is something you really need, such as a car for family and work purposes, you may have to take out a loan, but you need to be careful. For expensive purchases, the interest rates can be high, so it is wise to search for deals with low monthly interest. The longer the loan period, the less you will pay each month, but the more interest you will end up paying for. So, where possible, go for a plan where you can pay for the product as soon as possible. For lower-cost purchases, a short-term loan may be better for you. Check this out as a possible option.
If you have several outstanding debts, consolidate them into one easy to pay, low-interest payment each month. Seek financial advice from a reputable bank to consider your options.
When it comes to credit cards, it is advisable to never get one unless they offer zero interest on purchases. If you do have a card, only use it in emergencies, and not for impulse buying. As soon as you can, pay back what you have borrowed from the card to avoid interest on late payments. If your credit card has led you into trouble in the past, do yourself a favor and cut it up and throw it away.