5 Steps To Manage Your Finances

5 Steps To Manage Your Finances

With the mere mention of money stirring up feelings of panic and fear among many people, the hold that financial strain has over thousands of households is undeniable and as important as money is to everyday existence, knowing how to control your finances rather than allow them to control you is the key to a comfortable and debt free life.

Make a budget

The best way to stay on top of your finances is to know exactly what you have to work with. Keeping track of all income and expenditure for a month and then highlighting areas where cutbacks can be made will soon allow you to feel more in control. Once you have an understanding of your spending habits, you can draw up a budget so you always know you are living within your means; just be sure to be realistic with your expectations.

Be open to change

Having a budget is a great start towards managing your finances but you must regularly review these figures and be open to changing them. With your income possibly changing, spending habits evolving over time and inflation affecting prices, a budget can quickly become outdated. Being open in other areas can also help, such as switching banks to make the most of better interest rates, changing to a different brand or store to reduce grocery costs or altering TV, internet and phone contracts to get a better deal.

Borrow sensibly

Borrowing money is now a common way to fund various expenses; be it the purchase of high cost goods such as cars, a holiday away from the usual day-to-day pressures or to breathe life into new business ideas. The problem with borrowing money is that this immediately leaves you financially indebted to other people and you must ensure you remain up to date with all repayments.

Be aware that borrowing money from one lender to pay off debts to another is never the answer; focus on one repayment at a time rather than risk juggling more than you can handle.

Spend responsibly

Credit cards can be a great safety net in tough times but they can also act as a temptation to buy your way into debt. Never make purchases based on what money you may have in the future; always spend well within your current means. If in doubt, rent an item first or take time to consider whether the urge was merely tempting you towards an impulse buy, the expense of which you could in fact live without.

Establish savings

Getting into the habit of saving up your surplus cash in a savings account will not only reduce the temptation to blow your budget and overspend but will set you up for a much more comfortable retirement. If traditional saving methods don’t appeal to you, you could capitalize on the growing trend of investing your money in the likes of precious metals; just be sure to monitor your portfolio at all times and move your money around depending on the condition of certain assets.

About The Author

Edwin is a marketer, social media influencer and head writer here at Stack The Chips. He manages a large network of high quality finance blogs and social media accounts. You can connect with him via email here.

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