It's a new year and that means you've been thinking about how you need to get on top of your finances this year??
Then read on ;)
There are always a few areas that need improving in your budget, but if I could only ever offer one tip, it would be to ALLOCATE ALL OF YOUR INCOME!
Every dollar that comes in needs to be put somewhere in order to pay for something. Even if you have left over money at the end of the week, don't just feel like you can spend it because it's there. Make it unavailable to yourself but put to good use, like towards debt or savings.
-It will keep you above water and you'll always be ready for all expenses and bills.
-You shouldn't need to spend any more than what has been allocated.
-You know exactly how much it costs you to live and what income you need.
If you've managed to get yourself into debt, you now need to get yourself out and put some measures in place to stop it from happening again.
GET RID OF ANY TEMPTATION TO FALL BEHIND
PRE-PLAN FOR ALL EXPENSES
You work so hard to earn it so you want to keep as much of that stuff in YOUR pocket, not give it away which is essentially what we do.
- So who deserves your money??
Don't freely hand that cash out.
Ask yourself if that company is deserved of your money (before you give it up)?
Is it going to a good place to benefit you?
Is it the best value for money?
Companies only want your money for their benefit so it's up to you to get the best value when spending. Find the best companies for everything you buy; expenses, bills and retail therapy.
Changing your mindset is hard, though you really do need to change the way you think about money, the way you look at your money and the feeling you get when you spend it.
By looking at each of these and trying to change the way you think, look and feel about finances, you'll allow yourself to live comfortably even on a low income, knowing where it all goes.
I use sections in my wallet for specific spending and cash money bags for things I am putting extra money away for. Keeping all things separate so money is not mixed up together - A sure way to lose control of it again.
I withdraw all 'cash' that needs to be allocated, amounts like fuel, my spending money and grocery money gets put into its section ready to use. Then I know how much I have available in that area.
Some weeks I don't use all of my fuel money for example, so this area can actually build up fast with fuel change over the weeks. After a month or two I can use the change built up for fuel instead and use my allocated fuel amount for a special extra.
Grocery money can be the same. Allocate a regular amount to spend each week (slightly over estimate if you can) and keep it at that amount every single pay. You'll find that you may spend less than allocated sometimes which gives you grocery change to go with the next weeks amount. After a while, this can build up to give you a full grocery shop one week without needing your allocated money.
I call them 'Bonus Weeks' where I'm able to use the amounts not needed once in a while, for other things, debt, an activity with family, a night away, or maybe just something you've wanted but couldn't afford.
By letting any allocated money roll over to the next pay period, you're already ahead with your money! It doesn't take long to get on top of it. Sometimes only weeks ;)
Your income is repetitive and your expenses should be too; A patterned list of places to put it to work will be often enough to become a habit and finally CONTROL!!
EASY STEPS FOR INCOME OUTCOME
* After being paid, Withdraw 'cash' needed for your cash
sections (wallet or cash bags/envelopes).
* Transfer any money needed to other accounts to wait for bills and other 'not so often' expenses to be paid when due.
* Leave weekly amounts in pay account for any expenses taken
each pay period.
The money will be there to cover everything. It really is that easy!
By having different amounts going into and coming out of different accounts, you can slightly separate expenses. Handy if there's two incomes paying for different expenses. Allocate certain income for certain expenses to make it even easier.
PERSONAL CHALLENGE TIME!!!
1. Have a go at allocating your income for just 2 pay periods to see how easy it really is instead of spending it the way you usually do. If you know how much you will be paid (you should!) write down a list of where you should allocate the money to and allocate it. The best way to allocate any of it is to pre-plan for it.
2. After you have allocated your income when you have been paid, DON'T spend any more money for that pay period.
You shouldn't need to if you've put it all in the best places possible. That includes a small amount just for you - personal spending money. Don't go without it, even as little as $20 or you will want to 'dip' into something else... tut tut!!
*NO SPENDING UNTIL NEXT PAY.
*ONLY PAY FOR EXPENSES AS YOU NEED TO USING THE MONEY YOU'VE ALLOCATED.
3. Write all expenses down so you can cross each one off as you pay them or as they're taken out by direct debit to keep track of your balances until next pay. This will just keep you in the loop and you will learn to pre-plan for all expenses throughout the year. Be ready for them.
4. After a few weeks you will know exactly where your income goes. No more 'where the hell does all my money go?'
- You will know. While completing your personal money challenge and not spending extra, you'll have time to notice if any of the amounts on your list are ridiculously high and you'll be able to cut back on any wasted expenses. This
is handy if you're unable to pay all needed expenses as you can go through and tighten any possible, electricity companies, telephone companies, even your mortgage. There is always a better deal out there. All of these savings
together could probably cover another expense and enable you to cover everything ;)
We all look forward to pay day but by challenging yourself to not spend more than required, you will find pay day even more exciting as you are able to pay for everything and sometimes even extra!
You're running your own little economy so pre-plan where it is to go to give you the best outcome. When it's running like a well oiled machine it will work for you. Reap the benefits in each following week and year.