It can be difficult to learn how to efficiently maintain personal finances due to the fact that the task is often not taught in school. It’s often considered a learned skill that takes time and patience to ensure that your money is properly managed. The problem with this, though, is that all time it takes to learn money management means that sometimes, you’re going to make mistakes and end up in a heap of trouble. Luckily for you, there are a number of ways that financial experts recommend organizing personal finances to ensure you effectively cross every T and dot every I.
Learning good money management isn’t that easy, but it will be worth it. You don’t want to spend all your days at work trying to pay off massive credit card debt, a home you can’t afford, and cars that you only get to drive to work and back. If you learn how to budget, spend wisely, and save as much as possible, you’ll be a much happier person for it. Here are a few tips for getting your finances back up into the green on your expense sheet, instead of swimming in the red.
1. Create a Realistic Budget
Many people do not have a realistic budget established that they follow on a consistent basis. Calculate your income and expenses while making room to save and pay off debt. There should also be a budget for unexpected costs, which can include an oil change or renewing an annual membership.
2. Use Cash
Although using a debit or credit card is the primary way that most people pay for goods or services, studies show that people tend to spend more when using a card. It can be easy to forget how much you’re spending without literally seeing your money, making it important to use cash for household products, groceries, and fuel.
3. Consider Filing for Bankruptcy
There comes a point where personal debt can become impossible to repay, which can often be due to mismanagement of finances or a recent layoff. Filing for bankruptcy through Abakhan & Associates Inc. can often mean financial freedom and the best way to jumpstart your journey back to stability. This will help you either erase your debt completely, or restructure it in such a way that you can affordably and quickly pay it off.
4. Use an Envelope System
Keeping cash in different envelopes is an efficient way of managing your money and staying within your allocated budget. Once the money is spent from of an envelope, there is no other option than to wait for payday to spend more.
5. Reduce Spending
It can be easy to spend hundreds of extra dollars a month on unnecessary items or luxuries, making it important to brew your own coffee at home, bring sack lunches to work, and even reduce your trips to the local salon.
6. Create an Emergency Fund
Emergencies are unavoidable and bound to happen, but can easily wipe out your bank account or lead to debt if not properly prepared. Create an emergency fund of $1,000, which can be used on unexpected car repairs or medical bills.
7. Save Three to Six Months of Income
Job changes and layoffs can be expected in a recession, making it important to save at least three to six months of your income for a way to continue paying your bills should you lose a job. This will make it easy to take your time finding a new position and to avoid getting into debt.