Archive for the ‘Money management tips’ Category

Most of us enjoy the experience of shopping; the feeling of getting new interesting things is an enjoyable activity. That’s why we shop and buy new items on a daily basis to fulfil that specific need. Unfortunately, many people and families live way beyond their means causing them to save little or nothing at all. Many spend significant amounts of money that totals more than their income and subsidize their spending habits by using credit cards. Whether you are currently in debt or dabbling with there’s no better time than now to consider cutting back on your expenses.

Cutting back on expenses is perhaps the best way to avoid debt and it is also a great way to recover from it if you already owe large amounts of cash. You might not like the idea of cutting back on your spending habits, but sometime it’s just what you need to do. Here are a few helpful tips on cutting back your expenses and minimize your debt.

Track All Your Monthly Expenses

Get into the habit of tracking your spending habits. In order to cut back effectively you need to know what you’re spending your money on. Keep track of everything you buy on a daily basis. You’ll probably end up being amazed at the end of the month, as to what you’re spending all your hard earned cash on. You might also find out that you’re spending a lot of money on unnecessary things.

Stop Impulse Shopping

If you enjoy buying things on the spur of the moment, with very little thought of the financial consequences, there are a few ways that can minimize this habit. One good strategy is to avoid shopping malls and certain types of stores that promote impulse shopping. While you will still have to shop, one way to keep you on the straight and narrow is to create a shopping list and stick to it. A shopping list will ensure that when you go to the shop to buy a few things, you don’t come out spending more than what you intended to spend in the first place.

Carry a Limited Amount of Cash

Make sure you only carry enough money to cover some essentials. Don’t carry your entire salary with you at any given time. This will prevent you from spending your entire salary in one go.

Cancel Store Cards

For many, store cards offer convenience, but also just a quicker way to get into debt by over spending. It’s unnecessary to have several store cards. Having many store cards to your disposal can lead to excessive and out of control spending. Just politely say no the next time a store employee asks if you might be interested in a store card. You might just end up saving yourself a lot of unnecessary debt.

Many people think that if they live on a strict financial “budget“, they can’t spend money on anything fun anymore. Nothing could be further from the truth. It is not just about stashing your money away every month and never enjoying the fruits of your hard labour. We work hard to earn our money so we certainly should enjoy some of it as well. We just have to learn how to do so wisely.

Understand it is just stuff

How many times haven’t we just had to have an item only to finally buy it and it wasn’t quite what we thought it would be? One of the key principles to spending wisely is to remember that this stuff is just that, stuff. Nice cars still get old and break down. Electronic goods still become outdated, and even beautiful homes need to be maintained and repaired over time. Nothing we buy will ever bring us true happiness. Owning nice stuff isn’t wrong, but you just have to remember where that “stuff” falls in priority to the rest of your life.

Don’t forget the big picture

Another key factor in spending money wisely is to understand what the “opportunity cost” might be. If you are more concerned with what you’re driving or what designer labels you’re wearing than you are with your retirement planning, you might just end up working much longer than you ever planned on doing. When we make decisions to spend some money, that money is no longer available to be used for other future opportunities. I am not suggesting that you never buy anything nice and just stash all your money away in investments. Instead, I am encouraging you to remember to consider the big picture of what you want to achieve in the long run and see if your spending habits are matching up efficiently to those priorities.

Have a plan

Have a plan for your money. Most people don’t just get in their car and drive off without some kind of idea of where they are going. We usually have a general idea of where we are going and the most direct way to get there. Sure we may stop off here and there to enjoy some attractions or enjoy the scenery along the way, but at the end of the day, our goal is to get wherever it is we are going. The same is true for spending your money. Have a plan. Tell your money what it is going to be doing and then stick to that plan. If there’s something you just have to have, then consult the plan and make the necessary adjustments to accommodate that one thing. Remember however that the goal of dealing with your money is to enjoy the process of doing so. Make sure to have fun but avoid unnecessary things that might just cost you more in the end.

Running your everyday life and making ends meet at the end of the day is an exhausting task, but it’s one that has to be done. You spend so much time and energy concentrating on your job, family and dealing with everyday events and stress that your personal finances gets left behind. How many times have you not been shocked to find that there just isn’t enough money going around to cover all the bills and unexpected emergencies that just seem to appear out of nowhere. That’s why you need to become your family’s Chief Financial manager.

Here are my five easy guidelines for treating your personal finances like a business:

Be Your Own Board of Directors.

To make good decisions, you must know what you’re trying to achieve. Always keep your long term goals in mind. In a business the Board of Directors will write a mission statement to keep the company on track towards achieving its goals. At home, it’s up to you to define your mission and make sure you’re fulfilling it by writing down your goals. Not just your financial goals either, but your “life” goals because, let’s face it, most goals involve money. So sit down and jot down a few things you plan to do when you have some spare cash or those things you know needs to be sorted out as soon as possible. Does your car need a service soon? How much will this cost? How much would you need to set aside each month to save up for this to happen? Get the idea?

Know Your Operating Costs.

Keep on top of your monthly income and expenses by knowing exactly where everything is going. Determine how much your income is and how much you spend on a monthly basis on average.

Businesses know exactly what’s going on since they have to work to strict budgets and make their future projections according to prior year’s spending patterns. There’s a good chance that you don’t know what it costs to run your household without going broke on a monthly basis. By making out a detailed budget you will start to understand what happens to your money from month to month and that alone will empower you to budget better by cutting out or reducing the costs of unnecessary spending habits.

Know Your Net Worth.

Companies will measure progress toward achieving their goals through detailed balance sheets which list all their assets and liabilities. Compile your own balance sheet listing everything that you own and what it’s worth. For example; list your house (if you own it) checking and savings accounts, investments, vehicles, etc. then subtract everything you owe like personal loans, outstanding credit card balances etc. Now ask yourself – “If I had to sell everything today, how much cash could I get?” That will give you an idea of what you are worth when you add up any ready cash and investments you can sell. Review your net worth at least every four months to make sure you’re moving towards achieving your personal goals. Without this step, you will only discover the impact of your money decisions probably when it’s too late.

Forecast the Possible Results of Your Financial Decisions.

When a business makes important decisions, they use a future planning process where they look at the possible financial impact of one choice compared to another. You can use the same planning process to make smarter money decisions. For any choice you need to make, pick two options, and then look at what each answer would do to your cash flow and net worth. Bad choices put you farther away from your goals. Good choices get you closer much sooner.

Give Your Family an Annual Financial Report

Companies report their outcomes to their shareholders in their annual reports. You need to review your list of priorities with your shareholders – your family members, every year. Make them part of the solution. By involving your family members you will achieve your goals faster and easier than trying to achieve them on your own. Get answers to the goals you set for your family. Ask yourself this; Have your spending patterns changed? Did you spend less than you earned? Did you save as much as you planned? If you followed these five steps, your household will be a successful company in no time!

You need to keep track of where you spend your money on a monthly basis. This way you will start seeing where your money ends up going month in and out. When seeking financial advice and guidance, this would probably be the first suggestion being made to you by an expert. If you know how to enter numbers into a simple Excel spreadsheet, you can keep track of your spending habits easily. Once you’ve determined where your money is going, you are well on your way to having more money to spend. Yes, you’ll find money you didn’t know you had. Managing your money effectively doesn’t take much time and it will make your life a whole lot easier in the process.

The thing that’s different about this spreadsheet is that you can see all your monthly expenses by category for any given month. All on one page, along with totals by category. In this way it’s fairly easy to see exactly where your money is going every month.

You can set up your spreadsheet by month and keep track of your spending habit as they occur over a year. You can even create some folders for each year you keep track of.

To create a spreadsheet that will help you manage your money more easily, start by listing the ways that you pay for services rendered or shopping.

Your columns could read for example; house, cars, groceries, restaurant, medical, bank charges, credit card repayments etc.

Try to enter you expenses as soon as you can after spending your money on something. This way it will still be very fresh in your mind and you can exactly account for what your money was used for. Make a habit of it to keep all your receipts beside your computer as soon as you get home so you won’t forget or delay adding the data to your spreadsheet.

Don’t worry about tracking every pound spent, just try and do the best you can. Remember to clearly name your categories. Avoid setting up a category named “other” or “miscellaneous” because you will never know where this money really went.

For credit card, debit card, and check purchases:

Always enter your total purchase under just one category, such as “grocery,” so that you can easily match this number to bank and credit card statements when you look at them to make sure you entered all your expenses in any given month.

Over time you will start seeing your spending habits very clearly. You’ll be able to identify areas where you might be spending too much or you might even discover that you’ve been over charged for a service at any given time. Once you know where your money is going on a monthly basis, start looking for ways to reduce spending on things you don’t need. You’ll have more money for things you do need and want, and will even be able to save some cash for a rainy day.

Nowadays finding a payday loan provider is as easy as switching on your computer and typing in Payday Loan into the search box of your favourite search engine.

You’ll be pleasantly surprised by the number of options available to you from within the privacy of your own home and in the comfort of your own armchair. Just the sheer volume of companies looking to fulfil your immediate financial need can be very confusing.

This can only add unnecessary anxiety to an already stressful situation.

That’s why a few tips on how to make sure you make the right choice the first time when looking to overcome a financial obstacle will prove to be invaluable when put into use.

Tips:

1) Payday Loans should only be considered as a SHORT TERM solution to your immediate financial crisis.

Make sure to only borrow what you can afford to pay back on your next payday even if you qualify for a much higher amount. If you borrow too much and are unable to pay it all back come next pay day, it can set you back even further financially resulting in a downward spiralling effect on your finances.

2) How much will the Payday Loan cost?

Finding out how much the cash advance will cost you should be one of your first considerations when looking for a quick payday loan. Each lending company will have a different interest rate applicable on funds borrowed.

Before making a final decision on your payday loan of choice, make sure you are comfortable with the interest charged.

3) Who am I giving my financial information to?

When deciding to apply for a payday advance online, make sure your chosen company values your privacy and openly says so. Handing out personal information to companies online can be a daunting experience but with some web savvy guidance you will be sure to keep that which needs to be private, private.

Also check for a terms of use statement for reassurance that your personal details will not be sold on to any third parties in the future.

4) What is the maximum Payday Loan available?

You can find payday loan sites offering £200, £800, or even £1000 payday loans. Due to the high risk nature of payday loans, do not expect to receive the maximum payday loan amount available on your first cash advance. You will probably not be given the maximum loan amount available until such time as you have proven to the payday loan company your trustworthiness and willingness to repay your advance promptly.

5) What are the Payday Loan Repayment Terms?

Remember you should only borrow what you absolutely need and only what you are sure you can afford to pay back on your very next pay day. Normally you’ll have 30 days from the date the loan was acquired to be repay. If you are unable to repay your payday advance in full by your next pay day the lender will require you to at least pay the interest accrued to date in full to extend the repayment term. This may vary from company to company so make sure to find this out beforehand.