Have you not been able to get a handle on your finances because you just think it’s too complicated and time-consuming? On the face of it getting control of one’s finances can seem very daunting. This is especially true if you have lots of bills to pay and mouths that need to be fed. However, when you strip it down to its bare essentials getting control of your finances is not all that difficult. In fact you could probably get a handle on them this weekend.
Step #1: Learn how to budget
Some people are lucky. Money management just comes easy to them. They don’t need a budget because they don’t spend much, pay their bills on time and can enjoy the experience of living a responsible financial life. However, this is not true for most of us. We like to spend our money and we want things. We try to find that subtle balance between saving for the future and enjoying what we earn. If you feel that you fall into this category, you probably need a budget. If you’re not familiar with budgeting, here’s a video featuring financial ex[ert Dave Ramsey that could help.
A good place to start is by breaking down your spending into categories and then allocating your money to them. You will have both fixed costs such as rent and utilities and money you set aside for saving and investments. You should also have some spending money. The important thing is to figure out how much you need for your fixed expenses and how much you want to save and then use the rest as you please. Naturally, if you want to be really responsible you would have a high savings percentage. But you do need to account for your lifestyle and how you enjoy yourself. In other words, don’t avoid buying things you want from time to time or taking vacations. And there are tools available that can help you with your budgeting. One of the best ones for the iPhone is Jumsoft Money while Moneywise is a great budget-tracking app for Android phones.
Unfortunately, flexibility isn’t for everyone. If you fall into this category you may need a stricter approach to your budgeting. In this case, consider using a zero-sum budget. This is where you have to decide where every cent of your money goes so that you cannot make irresponsible choices. You might feel suffocated by this level of strictness or you might find it helpful.
Step 2: Make a savings plan that will work for you
Savings plans don’t have to be as complicated as a budget. What you really only need to do is regularly dump some amount of money into a bank. Even if you can’t deposit much each month, it will eventually add up. Assuming that you have a job and a reasonable salary you should be able to save some of your money each month. Do you find that you have a hard time saving money? Then there are ways to trick yourself into saving. For example, you could use direct deposit to automatically put money into a bank account that’s hard to access or withdraw from. Or you could divide your savings into several different accounts so that getting it all would requite a lot of work.
If you have trouble with your spending, shred your credit cards and make it hard to reach your cash. Some people have found that prepaid debit cards are a good way to cut spending because you can’t spend any more than you’ve deposited on the card. For example, if you were to deposit $500 on a prepaid credit card and spent it down to $0 you would have to either quit spending or deposit more money onto the card.
Put time on your side
Another way to save money is to put time on your side. If you find an item you want to buy just wait until it goes on sale as almost everything ultimately does. There’s nothing wrong with buying stuff used, either. For example, we buy all of our Apple stuff as used and refurbished and generally save at least 50% off its original cost. And there’s practically no reason in the world to buy furniture new. If you watch the listings on Craigslist, you should be able to buy almost anything you need at a deep discount.
Step 3: Eliminate your debt
If you’re wallowing in a swamp of debt such as student loan debt you can’t manage, you need to make a plan to fix this. In the case of student loan debt, there are a number of tools available to help you. You should check out Student Loan Hero or for everything else, get ReadyForZero. This is a smart phone app that can help you do just that – which is to pay all your debts down to zero. Just don’t try to pay off debt without having a plan. If you do this you are almost bound to fail. Other good options for paying off debt you might explore include using the strategy of “snowballing” your credit card debts or getting a debt consolidation loan. If you have high-interest credit card debts you should be able to get a handle on them by transferring those balances to a credit card with a lower interest rate or, better yet, a 0% interest balance transfer card. Many American families have also found debt relief through debt settlement. Companies such as National Debt Relief have helped thousands of Americans get their debt settled for pennies on the dollar and become debt free in just 2 to 4 years.