Effectively managing your finances is, without a doubt, one of the most intricate parts of daily life.
School teaches us many useful things, but skills such as budgeting, investing and planning for retirement often get ignored in favor of Pythagoras’ theorem and analyzing classic literature.
There are, however, some simple ways to sort out your household finances and get ahead in life:
Dodge the Loan Sharks
Whether you’re just getting set up or life’s hit you with a crisis, credit can be a very tempting option. The interest that comes with borrowed money, however, is less than ideal.
If you can avoid the trap of “payday” loans and high-risk finance deals you’ll be much better off in the long run. Instead, research companies that provide small online loans with low interest.
This practice, often referred to as micro-financing, has made borrowing far more sustainable, allowing access to required capital without falling into a cycle of debt.
Budget the Right Way
The term “budget” is often considered synonymous with never having nice things or doing anything fun. Instead, try removing the cost of necessities from your income then balancing your “disposable” funds between savings and desires.
This way you’ll be able to maintain your lifestyle and secure your financial future. Remember to allocate a healthy amount for savings but avoid assigning a purpose to every cent that goes into your account.
No More Late Fees
Sometimes we’re just too busy to remember to pay the bills. If you have your necessary expenses direct debited, however, you don’t even have to think about it, and your payments will never be late again.
Not only will you avoid the possibility of extra fees but you also can’t spend what you don’t have, so if you find it hard to focus your finances this can be particularly helpful.
Pay It Weekly
Paying your monthly expenses weekly (when you’re not charged extra for doing so) can make your life far more manageable.
It allows you to tailor payments to match the standard weekly pay cycle you’ll get with most jobs and means you don’t need a lump sum in your account when the bills come in.
Additionally, if there’s interest applicable, you’ll reduce the amount accrued on each payment cycle and drastically lower what you pay over the life of your contract.
Keep ‘Em Separated
While opening a separate savings account may seem like a hassle, it can be quite beneficial. Not only will this help remove the temptation to spend the funds, but it also allows you to choose an account type that pays extra interest.
This means that the bank is essentially helping you save and provides an incentive to add more to your savings when you find yourself with some extra cash.
Latest is Not Always Greatest.
Even though society is geared towards constant consumerism, you don’t necessarily need the newest model of everything. Sure, it’s nice having the latest device but when considering your purchase refer to the old adage “if it ain’t broke don’t fix it.”
Unless you’re getting extra features, upgrading to the latest model doesn’t hold much value, not only will you regularly be paying out for unnecessary items but you’ll be creating clutter in your house or adding to landfill for no good reason.
Most importantly, don’t worry about how other people are doing. Everyone has their own system that works for them, and personal finances are subjective by nature.
Set yourself goals, find out what works best for you and stick to your plan. Once you have an effective system established, everything else will fall into place.