Personal Finances are a challenge for many people. We are educated to believe that we need to make as much money as possible and that we need to buy things to keep ourselves happy. However, we have very little information on how to budget our money, how to save them and how to turn them into a safety net. This is what you have to do to get your finances in order!
Know your debt
In a world where credit cards are widely available and common, the majority of the people have some kind of debt. Student loans, credit cards, mortgage, car payments, all these can add up to incredible amounts. When you don’t know exactly how much you owe, it is easy to neglect paying them back.
The first thing you need to do is to write down all your debt and understand how much interest you pay for every single loan. Once you have this figured out, you can move on to the next step.
Make payment plans
Even if the interest seems small, it adds up, especially on big amounts and over the years. Even if you can’t afford to pay all your loans in a few years, make sure you have a stable (and realistic) payment plan. When possible, pay more than the due monthly amount.
A simple trick that you can apply is to save your loose change for the entire month then deposit it towards your loans at the end of the month. It may not seem like much, but it makes a huge difference in the end.
Have a budget for everything
And by this, I mean every single thing. When you get your paycheck, sit down with a calculator and plan your budget. Put money aside for groceries, for gas, for clothing, for fun times, home improvement and whatever else is needed.
When you spend money from a smaller budget, you tend to be more careful towards your spending. Plus, you will know exactly how much money you can spare.
Helpful tip: save first. Put the designated amount in your savings account at the beginning of the month, not at the end, so you don’t get tempted to spend them.
Apply a “stand-by” rule for big expenses
It is much easier if you implement this rule for all members of your household. Whenever you want to buy something that is more expensive (you can set the amount depending on your income), you have to keep it in “stand-by” for 10 days. If you still feel the need to buy it after 10 days, go ahead.