We have all been there at one time or another. We get paid and a few moments later it has all disappeared. With the cost of living increasing and wages remaining relatively static you are definitely not alone in feeling the squeeze on your finances. But with careful management you can not only regain complete control of your financial situation you can also improve it dramatically.
I am going to share 5 simple tips to help bring about the end of your money worries.
1) Know exactly how much is coming in and how much is going out. A big mistake folk make when calculating their finances is knowing “roughly” what goes in and out of their bank accounts. If I had a dime for every person that said they knew “roughly”…
Make a spreadsheet of all your incoming and outgoing debt. Include every last cent.
2) Once you have your spreadsheet the fun begins. Don’t worry at this point if overall there is a deficit. For now, that doesn’t matter. This step you are going to go through your list of expenditures. Your cable, your energy bills, your rent and taxes. Put each expenditure in a simple traffic light system. Mark it red if it is compulsory i.e. rent and taxes. Amber if it is required i.e food, fuel. Green if it is a luxury i.e. cable, Netflix.
3) Now we have each expenditure marked as red, amber or green. Now we do our first debt diagnosis. Add together all your red expenditures and then see if you are in deficit against your income with your red expenditure alone. If no move onto step 4. If you have a deficit on your compulsory expenditure to income do not panic. There are steps that can rectify this. First look at whether the expenditures can be reduced. Is the rent or mortgage payment too much, would you be better off downsizing so that you can balance the books? Is your job paying the most it can in that area? If not apply to jobs doing the same thing but that compensate you more. Can you supplement income with a part time job? A great thing to do at this point would be to consult a debt charity. They will have a financial adviser much the same as myself give you tailor made advice to help you out specifically.
4) Addressing your amber costs. We all need food. We all need clothes. But we all know that there is great disparity in the costs of these products. Calculate where you can save a little money on each amber cost. Switching to a cheaper supermarket or buying non-branded produce is a very effective method of saving a lot of money quickly. Look at your fuel costs, can you cut down on your usage. Is there anywhere in walking distance you drive to on a regular basis? Saving $10 here and there on your amber costs could really make the difference between breaking even each month.
I have a simple rule, if in doubt shop about. See if you can get your electricity cheaper from another provider etc. Don’t do this as a one off. Regularly check your expenses and it will really reward you with the amount of money you save.
This simple step could mean you get a family vacation next year!
5) Green are your luxury expenditures. Instead of both choose between Netflix and Amazon Prime. Get a cable package with less channels. Do you really need the movie channel and a subscription to Netflix?
Cutting things out altogether on the green list will do the world of good for your pocket. Once your books have been balanced and debts have been repaid you will be able to evaluate whether you can have the luxuries back again. Nothing is forever financially. Sometimes in the short term we have to get drastic to make sure that our financial problems don’t become a long-term rut.
The good news is there is never a lost cause financially and with the right attitude and guidance you can really change your financial standing. Stay tuned for more money tips and guides and feel free to look around our website for plenty of other useful information. If you can’t do these steps yourself always ask for help. Debt charities exist to help people that ask them for help and they are always understanding.