Your budget has gone south this month. Actually, it has done the same for the last few months. Somehow, you just never seem to have enough to cover all of your expenses.
There are several common causes of chronic budget failure, as well as several common remedies you can use to change course. Here are a few ways to set things right:
Understand your relationship with money
It is important to know if you are a spender or a saver. Do you find it easy to spend money or to save your money? It is not about one of them being good and the other one bad. It’s a matter of understanding your identity, devising a plan and working on your weaknesses.
Locate your expenses and income
The best place to start is to determine how much income you are bringing home every month, what the expenses are and how much is left over to save – if any.
Create a budget but use a system you are comfortable with
Most people waste about 15% of their income. Whether you’re a spender or a saver, everyone needs a plan. The secret is to write up a plan and learn how to budget.
However, you need to find a system that feels easy to use, one that motivates you to use it. Some prefer using an Excel spreadsheet and entering in purchases from receipts they save. Others do better with a program that automatically tracks purchases and sorts them into pre-set categories. There is no right or wrong system; all that matters is that yours works for you.
Always include a non-negotiable item when you budget, This is something you treat yourself with and will act as a motivation.
Unexpected expenses are the easiest way to derail a budget. Make sure your budget accounts not only for your regular monthly bills (such as your mortgage/rent, petrol, utilities, etc.), but also for bills that come on a quarterly or annual basis, such as gym memberships, magazine subscriptions, association dues, club memberships or even annual insurance premiums. Total up the yearly cost for these irregular expenses and divide by 12 to determine how much you should be setting aside each month for them.
Consolidate your debts
The best way to save money is to get out of debt as quickly as possible. You will end up paying interest on all your loans instead of earning interest on your savings. You will be surprised how much money can be saved if you get rid of debt or manage it correctly.
Get rid of unnecessary direct debits – trim the fat
Cancel those payments you don’t need, no matter how little they cost. Maybe you’re no longer getting value from your gym membership, dental plan, magazine subscriptions, club memberships and other non-essential payments that eat away at your income. The rule is: If you don’t use it, lose it.
Once you start trimming, you’ll be surprised to find out how much extra money you really have.
Repay your overdraft
Overdraft facility comes with a cost. The cost is usually higher than the other sources of borrowing. Also, if one goes above or exceeds the overdraft limit, the charges are much higher.
Cut your credit card interest costs
Credit cards are an easy way to pay for things with a quick swipe or tap, but they can be expensive. High interest rates apply when you don’t pay off the card in full each month – and the longer that debt goes unpaid, the more its costs can drag you down.
Set-up automatic payments
Once you have set your budget and goals, automate all your payments so you don’t forget them. Include automatic deposits into your savings account. It will help you stay on track for achieving your goal. If your situation changes, review the funds that you transfer and make changes where needed.
Sources
https://www.businessinsider.com.au/a-firsthand-account-of-how-i-got-my-finances-back-on-track-2011-11?r=US&IR=T#know-your-numbers-1
http://time.com/money/4213095/steps-finances-back-on-track/
http://www.mirror.co.uk/money/household-bills/having-money-trouble-10-ways-7122685
https://www.aol.com/article/2014/12/16/5ways-get-your-budget-back/21003169/
http://www.oprah.com/omagazine/michelle-singletarys-short-and-long-term-money-advice_1
http://www.wisebread.com/how-to-get-back-on-track-when-youre-behind-on-your-bills