Woody Allen said, “Money is better than poverty, if only for financial reasons.” Nevertheless, money brings with it a great deal of stress for nearly everyone. The panic we sometimes feel about money issues can prevent us from addressing the problem and result in things getting worse.
Debt and the difficulties of balancing our budget affect most of us these days. The costs of being a student, buying a house, plus hundreds of everyday expenses, together with the ease of getting a loan, can add up to a big headache. But it is possible to remove the fear and confusion and get on top of the situation.
Questions to ask yourself:
- How much money do you have in savings and investments?
- How much money do you owe, including student loans and mortgage?
- Are you only paying off the minimum charge on your debts each month?
- Do you know what direct debits and other automatic payments you are making?
- What is the minimum amount you need to live on each month?
- How much of your income is left for paying off debts or saving?
- What do you need to be saving up for? (Christmas, birthdays, holidays, etc)
- How much do you spend on unnecessary items every day? If you’re not sure where your money goes, keep a spending diary for a week or month, and you’ll probably be surprised.
The answers will help you get a grip on your situation and highlight any problems you may be facing.
Next, sit down with a clean sheet of paper and try to come up with possible solutionsfor example, canceling unnecessary automatic payments, taking sandwiches to work instead of buying lunch, or opening a separate savings account.
Be in Control
Don’t ignore the big financial problems they won’t go away by themselves. Be brave and open all bank and store card statements. Attempt to break the impulse-buying habit if it is a problem for you try giving yourself a spending allowance or paying with cash to make you think twice. Remember you’ll appreciate things all the more if you’ve saved up for them.
Cut out luxuries if necessary, but also see whether you can go further. You will need to be ruthless, but the quicker you clear your debts, the better. If you have leased items, such as furniture or a car, and have made the payments, return the items, since if you are up to date with your payments, you will not owe any more money.
However, money management isn’t just about spending less. Think about whether you are getting the salary you deserve. Consider asking for a raise at work, or think creatively about other ways you could increase your income.