There’s more to life than money. But it’s much easier to enjoy your life and avoid periods of stress when you’re not constantly worrying about where the next cash installment is coming from. Having a good plan for how to manage your money can save you a lot of sleepless nights and nervous days. What’s more, you don’t have to be a pro with numbers to get better at handling your cash either.
If you’ve been struggling with your money for a while now, but you’re ready to make a change, the following tips could be just the guidance that you need.
One of the biggest mistakes that people make with money is they think about what they need in terms of the “short-term.” That means that even when we budget, we think about things like food shopping, bills, and council tax, but we don’t consider birthdays, upcoming holiday expenses, and other irregular costs that could crop up.
When you want to get the most out of your cash, you need to adapt to a more “big picture” way of thinking. Sit down with your partner (if you have one) or on your own with a bundle of your latest bank statements and make a list of regular and irregular expenses. Try to think about everything that you need to pay for over the course of the year, from water bills, to credit cards, and even birthday parties.
Once you’ve got your list of irregular expenses, you can create a section in your budget that’s specifically designed to deal with those things. Every month, you’ll put a little more money away into that segment of your bank, so that you’re never caught off guard by a sudden expense.
Yes, sometimes to make money, you’ve got to actually spend some too. That doesn’t mean that you should ignore your budget and go and get a takeaway whenever you fancy one. However, you should start to think about your expenses in terms of what they pay back to you in the long-term. For instance, rather than telling yourself that you can’t afford to buy a new computer for an online course, ask yourself what that course will do for you long-term.
If taking out a personal loan now that costs you £100 a month means that within a year, you’ll be able to earn an extra £500 a month from your employer because you have a better skillset, then you know that the loan is worth it. Sometimes you need to think about how investing in your future can pay you back.
Remember that investing in your future also means having savings to put away for things like long-term goals and emergency expenses too. Focus on your emergency expenses before you look into other forms of saving. That safety net will be crucial when unexpected things come into your life and leave you dipping into other parts of your budget. Once you’ve got about 3 months of wages in savings, you can look into other goals.
Finally, rather than expecting your current budget to last for the next three years, or until you get a promotion at your job, make a commitment to yourself to sit down with your expenses once every couple of months and rethink your spending. You might not have had a major change in circumstances during that time, but you may have encountered new ways of saving that could help you to get into a better financial situation in the future.
On the other hand, you might decide that you’re ready to change one part of your budget entirely because your lifestyle has changed. For instance, you might cut down on the amount you spend on your car, because you’re walking to work more often now since you want to lose weight and improve your fitness. If that’s the case, then you might also be able to reduce the amount you spend on unhealthy food and snacks too.
Alternatively, you might decide that you’re ready to start trying for a family, so you’re going to need to put some extra cash away for essentials that you’ll need in the future. This could mean that you need to move some of your cash out of your discretionary spending budget and into your savings budget instead.
Life is constantly changing, so becoming better with your finances means that you need to know how to change with it.
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