Review And Analyse
By noting down all your expenses on pen and paper, or on the PC excel sheet, you can start to review and analyse your spendings on a weekly or monthly basis. This will make you find innovative ways to save money, catching hold of ‘runaway spending’ that went unnoticed before.
Example: You could find that the $5 Smoothie that you had every day, could cost much less if you made it at home.
MORE IDEAS FROM THE ARTICLE
While kids and teens get to learn about a lot of stuff, most families and schools do not teach them how to manage their money. In some families, it is considered a taboo subject and many friends are too busy showing off to help others manage their finances.
Even the basics of financial literacy are not taught at an early age, resulting in many of us falling into the trap of consumerism and debt.
Most of us know how much we make, but we need to pay close attention to how much money is actually coming in post-tax, and how much is going out.
You can start by writing down your Starbucks, Uber, Amazon, and take-out expenses, along with your car insurance, utility bills, subscriptions and memberships. Slowly we can realize that many of these small expenses add up to huge figures.
Knowing your credit scores and the details of the mortgage, loans and credit card activities that impact it, can help you manage your financial credit. You can find ways to improve your credit score once you check it for free using a variety of apps and websites available.
Before you take a big loan, it is advisable to check your credit score in all the available agencies in your country.
The trickiest form of debt, which is literally bleeding our finances, is the credit card debt. Make sure you know what the interest rate being charged is. Know that a 2% interest rate per month is actually 24% per annum.
If you stay out of debt by paying the total due on time, and not compound the interest, having a credit card with a good score can affect your credit score in a good way.
RELATED IDEAS
- Spend less money than you earn
- Always plan for the future: you should always look forward beyond the current month
- Make your money make more money: invest, start a business or invest in your education.
- Make savings part of your monthly budget.
- Keep your savings out of your checking account, as it may prevent you from spending it.
- Open a savings account at a different bank than where you have your checking account so it won’t be too easy transferring between them.
- Direct deposit to your savings account so only the money you want to spend goes to your checking account and your savings are preserved as they stay out of your mind.
- Consider switching to a credit union; they could be the place to go for better customer service, kinder loans, and better interest rates on your savings accounts.
- Only use your emergency savings account if you’ve lost your job, have a medical emergency, a car break, emergency home expenses (like a leaky roof), or you need to travel to a funeral.
- Think about investing if you have more than six months’ savings in your emergency account (nine months if you’re self-employed), and you have enough socked away for your short-term financial goals.
Instantly stopping your bad spending and saving habits may set you up for failure and leave you feeling discouraged and less motivated to improve your finances.
Changing your spending habits should be taken on in smaller steps. For example, if you like to eat out, save it for Saturday night.