Financial problems are not much fun. Money management is not a subject that anyone will teach you in a classroom. You do not want to go through life on a trial and error basis when it comes to money. What you need to do through life is to use your common sense and live within your means. That does not mean that it is automatically wrong to obtain credit. If mortgages did not exist there would not be much of a real estate market. Similarly the vast majority of students need loans in order to fund their education.
It is never too early to learn to manage your money. When you are still a child and your parents give you an allowance you may have spent it immediately and begin to wait for next week’s. If you save some of the allowance each week, perhaps to save up for something special you will be learning good habits. In the years to come that saving habit for something like a deposit for real estate or better still providing for your retirement even though it seems so far away is an excellent way to behave.
The key to money management is a comprehensive budget which includes every piece of income and expenditure. If you are having trouble yet have regular income then your first action should be to take the time to write everything down. Once everything is in ‘black and white’ it may not make pleasant reading.
Often there is little scope for increasing monthly income so the real test is whether there are savings that can be made in monthly expenditure. Savings can come under a number of categories:
- Interest being paid on any current loans, credit and store cards
- General household spending
- Utility and insurance costs
Interest Costs per Month
Mortgages are in the vast majority of cases over a long term and generally a low rate of interest. Mortgages are rarely a problem when looking at a budget unless it appears to be completely unaffordable. The real problems are on credit cards and store cards where any balances incur a high level of interest at the end of each month.
Credit cards are convenient but they are very dangerous because of the temptation that they offer users.
If you have significant credit card debt then you should look to take out a personal loan from an online realistic loans home lender; the rate of interest you will be charged will be much lower than you are paying. You will save money each month by getting rid of balances in this way. Of course you will have limited leeway if you have not got the self-discipline not to build up balances once again.
General household Spending
There are things as simple as switching off lights or any electrical device that may be registering the slightest of electrical use, down to a DVD, PC or printer. Energy is expensive and it is certainly worth reducing consumption. Perhaps you are buying brands which are no better than generic products? It is all too easy to be seduced by the marketing tactics of major brands. Are they really better than the generics?
Utility and Insurance
It is easy just to renew insurance annually without checking whether there are more competitive quotations available. Likewise the utility sector is competitive and you should check periodically whether you can get a like for like service at a better rate.
It is easy to tell yourself it is not worth the effort to be regularly checking other suppliers but if you want to be certain you are not wasting any money then you should do it.
You might be surprising how much you spend on your social life. Is a really a sacrifice to cut down on your visits to the coffee shop? You can work out for yourself how many coffees you buy a week, at what cost, weekly and therefore annually. You can buy equally good coffee to make for yourself. It is fun to cook so do you really need to eat out so often? There are several questions like this you should ask yourself.
You may not go so far as to use the numerous special offer tokens that are available but why not if it does not take you out of your regular routine to spend them?
It is never too late to start to repair your financial situation. Obviously the older you are and closer to retirement, you need to think about how you can fund your later life. Even though some financial institutions are far more conservative than they used to be when it comes to approving applications for remedial finance, if you need that help and have a regular income, a loan may just be an important part of your solution.
***Image thanks to prweb.com***