While some people are great with money, the fact is, most are not. To make matters worse, when most people come into a large, unexpected amount of cash, they tend to spend like celebrities. If you have trouble managing your money, or if you have a hard time dealing with sudden income changes, this savings advice from We Know Money will help you keep your finances in order.
1.) Keep Debt to a Minimum
One of the easiest ways to keep your spending in check is to avoid taking on debt. The problem with debt is that it gives people a license to spend money that they don’t have, and at the time, it almost feels like free money. Unfortunately, when it comes time to pay the bill, most people realise that they have dug themselves a financial hole. Of course, it doesn’t help that credit card companies send out offers by the truckload to virtually everyone in the country on a daily basis, but by refusing to take part in these offers, you can avoid the temptation to spend money you don’t have.
2.) Make Saving a Habit
If you have trouble living within your means, you probably don’t save, but you need to realise that saving is one of the best ways to keep your spending in check and to plan for unexpected emergencies. Essentially, saving is all about discipline. Each time you get paid, you should devote a certain portion of your money to a savings account. If you aren’t able to resist the temptation to spend your savings, ask a friend or relative to hold onto the money for you. Additionally, you may want to partner with a bank or investment firm that will be able to place your money into an account that doesn’t allow you to draw against it for a long period of time.
3.) Make Lists
Another great way to avoid spending every penny you have is to make lists of items to purchase when you go shopping. Research has shown that individuals who go shopping with lists are far more likely to stay within a budget than those who do not. The problem is that most people who don’t make lists are more likely to browse while shopping. This can then lead to impulse buys and other purchases that you don’t really need. By having a list and sticking to it, you can avoid these extra purchases, allowing you to stay within your budget.
4.) Make a Budget
Speaking of budgets – make one and stick to it! Just like lists, having a set budget can allow you to spend only what you need to. At the beginning of the week or month, write down all of the bills you will need to pay for the upcoming pay period and then figure out how much you will have left. As mentioned, devote a portion of what’s left to your savings and then you will have a rough figure of what you can spend.
5.) Don’t Use a Debit Card
While debit cards are incredibly convenient, they can also cause you to spend more money than you have. This happens because debit cards are quick and easy to use, and many people don’t keep up with the balance in their accounts. By the time they actually check into how much they have left, they may realise that they’ve spent more than they planned, or worse, that they have gone into overdraft and incurred banking fees. After you’ve made a budget and figured out how much you’ll have left to spend after bills and savings, try to keep the remainder amount in cash. Doing so will allow you to actually see how much you have left to spend as opposed to simply visualising it in your head.
If you’re still having a hard time managing your finances after following these steps, you may also want to consider partnering with a financial advisor. Financial advisors help individuals to come up with plans to manage and invest their money to help it grow, and an advisor may also be able to give you tips on prudent fiscal responsibility.