While unexpected accidents and emergencies can mean we all need to use our credit cards or take out a small payday loan
from time-to-time, ensuring that you have the money to pay it back in full with next month’s wages will stop you from getting further into debt. Additionally, managing your monthly finances well will also mean you will not have to rely on credit every month just to get you to the end of the month.So to help stop you counting down the days until your next payday, here are some simple steps that will help you budget effectively.
Each month create a spreadsheet with the money you have coming in, normally your monthly wage, and the money you have going out. With your outgoings first put in your essentials (your rent or mortgage plus bills and what you spend on groceries), then any debts you are paying off and finally any extras you pay for but which aren’t essentials. This will help you to see exactly what you have coming in and going out each month, as well as allowing you to see what you can cut back on if you suddenly need to pay for something unforeseen. The key to creating a monthly budget is to be completely honest with yourself and don’t over estimate money you have coming in and underestimate money going out. Another important thing to remember is to keep track of small outgoings, for example magazines and candy you pick up while filling up for gas or your lunchtime coffee habit, you’ll be amazed at how these small purchases we all make without thinking about it quickly add up.
There are some big financial outgoings that come annually so try and put a little money aside each month to save for them. If you’ve got children consider starting to save for their birthday presents and party at least six months before hand, that way it won’t be as noticeable as suddenly needing to spend hundreds of dollars the month before. Another big one for many families is Christmas, again if possible try and start putting money away for this a year before so that when the festive season comes round again you don’t stress so much about how you’re going to pay for it all.
Debts VRS savings
While putting a little money away each month to pay for upcoming events and bills, if you’ve got a lot of debts that you’re paying off it is better to concentrate on doing this first and then think about saving. Normally the interest rates on debt will exceed the interest rates on saving accounts, so there is no financially advantage to having savings if you have debts. As well as this physiologically it feels a lot better to be debt free. Once you are free from debt, or if you are lucky enough to be that way now, you should consider adding into your monthly budget an amount you can save each month, that way you will have money put aside for when those worst-case scenarios happen.