With the global economy still struggling, some of us are running short of cash before pay-day arrives. However, there is hope. Until the economy fully recovers so we can all return to prosperity, it is up to each one of us to keep our personal finances in order.
All we need to do is plan our budget a little more carefully. We need to avoid the traps and pitfalls that drive us further into debt, and hold on until the day comes when we no longer have to watch every penny.
Here are four simple things you can do to get a firmer hold on your finances. By taking note of these simple hints you should be able to bring your debt under control and, with a little luck and a little hard work, even find you have a little left over to save for a rainy day until the next pay check arrives.
1. Bring your payments under control
Take a look at a few recent bank statements. What do you see? If you see any charges for exceeding your overdraft or bouncing a bill payment you may have a problem with cash flow, and this is the first problem that must be dealt with above all others. Bank charges can take a real toll on your finances, especially when you find you’re paying them more than once every few months.
If you’re struggling to cover the bill payments you might want to consider speaking to your bank about temporarily extending your overdraft. It’s not usually a good idea to tempt you deeper into debt, but an emergency buffer might help avoid those punitive late payment penalties and help you rein in your debt in the long run.
2. Consolidate your existing debts
Similarly, if you’re finding it a challenge to cover the minimum payments on multiple credit cards each month, many people find it helpful to consolidate their debt into a single loan. Debt consolidation companies specialize in offering loans to people who are struggling with their repayments, and they may even be able to help you if you have poor credit.
The trick here, however, is to make sure you don’t dig yourself deeper into debt. Look for a debt consolidation loan that offers a reasonable rate of interest and manageable payments, and make an effort to pay more than the minimum repayment each month. The sooner you clear your debt the sooner you’ll be able to find your footing.
3. Wipe out unnecessary expenses
All too many people complain that they don’t have enough to cover their bills while sipping a $5 coffee in their local Starbucks. $5 may not seem like much, but a cup of joe five days a week adds up to a little over $100 each month.
Most people find, when they really look into their expenses, that a surprising amount of their money goes towards little things like a morning coffee, snacks, gas for unnecessary trips and similar small, easy to ignore expenses. Now, nobody expects you to completely change your life and watch every penny like a hawk, but if you spend just a week each month denying yourself these little extras you’ll find you have a heck of a lot of money left in your pocket.
4. Make a budget
Finally, the best thing you can do to bring your spending under control is to put everything down on paper. Make a sensible budget – allowing for both the essentials and the occasional treat – and stick to it like glue. Reassess your budget each month. Have you underestimated the cost of gas? Have you overestimated the cost of lunch every day? Adjust the budget until you find the sweet spot.
It’s never fun to sweat over your finances, but as depressing as it can be to put a padlock on your wallet it’s the people who think carefully about their outgoings who end up in the best financial position. With a little common sense and a little awareness of where your money is going you can join them in financial stability.