We all want to make sure that we have our finances under control. The thing is that sometimes things get away from us and are out of our control. Dealing with stretched finances can place huge pressures on your home life as you juggle everything and try to keep your head above water.
There are very few people who have the luxury of not thinking about how much things cost or what they are paying out. Sadly, for most of us, this is not true.
Ask most people and they’ll tell you it can be hard to juggle household finances. With rising costs and high levels of debt – did you know the average American has $38,000 worth of debt?
Of course, not all debt is bad, in fact, it is healthy to have some debts. Without student loans or a mortgage, chances are most people would be unable to afford education to land a better job or the opportunity to own their own home.
The being said, it can seem like a challenge to make your paycheck last as long as possible, as well as cover all your outgoings too. So what steps can you take to make sure you are getting the most out of your money and making it work for you to ease some financial pressure?
Write it Down
You want to be honest with yourself about what you are paying out and more importantly what you are spending. Create a list or spreadsheet details all of your income.
Then start to look at what you are paying out on a regular basis. Use a credit card or bank statement to help you identify where all your money is going.
- Add all your essential bills first. These are things such as rent, mortgage, utilities.
- Insurances – healthcare, home, car, life and pet insurances if you have them.
- Next look spending on food and general expenses eg household products, clothes etc.
- Then add in your debts – student loans, car payments, credit cards.
- Next up is your non-essential payments. These will be your cable TV, Netflix, gym memberships and so on.
- Include things such as lunch costs for work, travel expenses, pensions etc along with anything you regularly buy such as a coffee on the way to work.
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Where Can You Make Savings?
Now you know exactly what you are paying out, you can see exactly where your money is going. Are you shocked? Do you know how you can go about reducing what you spend to free up some of your income?
Debts
In some cases, it may be that you need to look at other options such as an additional income coming into your home or finding appropriate debt help if you feel you are struggling with repayments. If this is the case, do not stop making your payments. This will have a severe impact on your credit rating.
Instead, try to negotiate with your creditors to lower your repayments or come up with a payment plan to pay back what you owe. If this isn’t possible, then look for a debt charity or organization that can help you get your debts under control.
Lower Your Payments
Then you want to be looking at your utilities. Are you getting the best deal possible? Shop around and see if you can make savings with another company. If you can, then make the switch and start seeing the savings as quickly as possible.
Then apply this to other payments. A great place to start is your insurance. Most specifically, your car insurance. Did you know you can insurance that covers you on a mile by mile basis? Only pay for the number of miles you drive. This is ideal for those who don’t use the car as frequently. You can make huge savings on your premiums. Make sure to read the pay-per-mile insurance overview to see if this is suitable for you.
Then follow this through to your cable and streaming services. Do you need them all and are you regularly using everything you are paying for? If not, you want to be looking at canceling your subscriptions or services and looking for cheaper alternatives if need be.
Outright cancel anything you aren’t using anymore or you aren’t using enough to justify the cost. Think magazine subscriptions, gym memberships etc.
Spending Habits.
Once you have identified all the areas you can make savings and put them into action, look at your spending habits. Are there areas you are wasting money that you can otherwise be used for something else? The easiest way to free up income in the first instance is to stop spending on non-essential items. Grabbing lunch on the go, a coffee on the way to work, a bottle of water for the commute home, it all adds up.
Look at exactly how much you spend and see how you can reduce that cost. The advice is pretty basic and chances are you will know what you need to do, it’s not hard. Cutting a spending habit and becoming more organised can be hard. Especially for those on the go all the time.
But trying to take your own coffee, water bottle and lunch out with you will help cut back on unnecessary spending. Allow yourself some ‘pocket money’ for treats like this.
A great idea is to put set amounts in different envelopes and label them for different things.
- Work Lunches
- Coffee on the go
- Takeaways/Meals Out
- Miscellaneous – covering any additional spending such as friends/family birthdays
Once this money is gone, it is gone and you have to be strict with yourself when it comes to spending. Make it last paycheck to pay to get the most out of your money without feeling like you are going without.
Managed carefully, you can make sure you are getting the most from your income without struggling or missing out on small things or treats each month. Just because you are short on funds, it doesn’t mean you don’t deserve a treat on occasion!