Do you have a good grasp of your income and outgoings, or do you rely on a rough calculation in your head, or maybe the odd glance at your online bank statement? Money problems are the cause of more stress than pretty much anything else in life, yet many people don’t have control over their personal finances.
If you take the trouble to keep track of your spending, you won’t get into unforeseen financial difficulties, and you could save a significant amount of cash over the year. It doesn’t have to be too difficult or time-consuming a task, either, and you don’t have to turn into Ebenezer Scrooge, endlessly counting your money and balancing the books.
Get your budget sorted
A personal budget is a fairly straightforward document to create, and there are all kinds of templates available online that you can use if you find them easier. A budget is just a list of everything you spend money on, which you then compare to how much you bring in each month or week. The key elements that ensure you use your budget effectively are:
- Include every expenditure, no matter how small or insignificant
- Get your figures as accurate as possible, no guessing or estimating
- Allow for the fact that some months are over four weeks long (sometimes, more like five weeks!)
- Allow contingencies for out of the ordinary expenses
- Allocate some spending money at a level you can afford for treating yourself
It shouldn’t take much longer than an hour or two to create your budget spreadsheet; then you can see what your disposable income is at the end of the month. If you have a reasonable excess, you can look at savings accounts or investment opportunities. If there’s a shortfall, you can see what’s costing you so much money and make some changes to stop wasting money.
Debts
There are two types of debt: the spending you make that is calculated and planned for, like a mortgage or car finance. The second is the unnecessary spending that mounts up over time and ends up costing you a great deal of money that you needn’t have wasted. Being in debt that gets out of hand can cost a huge amount in interest and fees, so if you have debts, focus on clearing them as a priority.
Saving money
Once your budget is prepared, you can look at how to make some easy savings. Switching utility suppliers and changing your broadband and mobile phone contracts are easy ways to trim your expenditure without compromising on how you live. If you’re paying for a gym membership and not using it, that’s money down the drain, so either find a way to make use of your membership or make sure you cancel it. You could also have a look at switching to a different bank, as there are advantages in changing to accounts with better interest rates and terms. You can find out more on chexsystems.com about changing accounts and what it means.
Savings and investments
If you have spare cash, don’t leave it in your checking account, make it work for you by putting it into a higher rate savings account or investing it. Savings are invaluable for managing unforeseen expenses or covering the costs of an expensive project like home remodeling. You can have savings accounts for specific purposes such as saving for your annual vacation or making an expensive purchase like a new car, as well as putting money away for the future.
Pensions and insurance
They may not seem so important when you’re young and fit but investing in a pension and life insurance are essential if you want to avoid financial hardship when you retire. Speak to a pension’s adviser or financial planning expert to find out how you can most profitably invest the money you have to secure yours and your family’s future.
Final Thoughts
Money management isn’t rocket science and is well within the capabilities of most people. Once you’ve set up your budget, just check on it once or twice a month to make sure your calculations were accurate. If your balance is down on the prediction you made, find out why so you can factor that into the budget and ensure you don’t get caught out in future.
Getting to grips with your money frees you from being its slave, giving you a far better idea of what you can safely spend, as well as providing an opportunity to save and make the best use of your resources.
Pinstripe Magazine Staff
Online Men’s Lifestyle Magazine on Gear, Grooming, Girls, Gadgets
