Personal Finance Management
Tips that will keep you off debt or help you snip debt in the ass
Unfortunately, personal finance management has not yet become a required or necessary subject in secondary school. Lets go with the notion that, its completely justified that we all are a little clueless on how to manage healthy financial lives.
Earlier today, I met up with an ex colleague, who has paid off a large amount of debt just recently, but still has a bit more to take care of, and just like any of us, he’s struggling with managing his finances, taking care of his financial obligations, while keeping his debt levels at bay.
I’m no expert at this financial management thing, but I do believe my profession in Economics and habitual finance practices, can assist a few of you. Down below, are money-saving principles laid out. Trust and believe that this collective knowledge will help you successfully overcome the crushing financial and emotional burden of debt.
1. Make a Budget
The first step toward solvency is often the most painful: You have to make a budget.
It may seem obvious to the point it doesn’t even bear mentioning, however coming to terms with your financial challenge is somewhat liberating because it aids you towards working a balance of what you can afford and that which you should not even window shop for.
Sit yourself down, get serious about paying your debts off, tabulate your debts, income and expenditure in meticulous detail, and come to terms with the magnitude of your debt and exactly what you need to do to pay it off.
2. Stop/ Cut down the going out.
Making a budget almost always leads to a decrease in spending. Creating a budget will force younto acknowledge where your money is going, and in turn, find expenditures you can eliminate and reorient your lives accordingly.
3. Learn to Say No
The difficult part about sticking to a budget is that it necessitates giving up some of the luxuries to which you’ve grown accustomed. And that requires saying no to people. A lot. I mean a whole lot.
Which only means telling your new girlfriend that you cant go on the vacation she’s been planning, because its out of your budget. This will require you to stand firm on your financial goals, and turn down invites to social events.
Frugality is NOT for social butterflies. As a matter of fact, you actually might lose several friends during your debt payoff process. Especially if they all come from affluent backgrounds, these kind of folk most likely wont understand why you turn down invitations to go out.
The good part is that some of your friends will understand what you’re trying to do and where you heading, but others will be like, ‘Why are you not coming out with us, we’ve made a reservation at Michael Angelo? Why aren’t you coming to the show?’” Look, most people don’t care what your financial goals are; they just want to hang out and have you do what they’re doing.
Sticking to a budget doesn’t spell absolute doom for one’s social life. It does, however, mean finding ways to hang out that don’t entail a R1000 bar tab every weekend.
4.Get a side hustle
There are only two ways to start saving more money: You can make more or spend less. Take up a second job, if you must to contribute more toward to their debt payments.
5. Work towards getting a raise
Get a raise that will provide a sustainable boost to your income and aid you towards saving or paying up your debts. When you get a raise as opposssed; to buying luxury items, save the new income for a down payment on a house so you can start building your capital.
Frugal living will put you on a path towards getting out of debt, but focusing on your careers so you can earn more money to help you achieve your goals sooner and ensure you’ll thrive long after your debt is gone.
6.Avoid lifestyle inflation
Make a conscious effort to avoid the dreaded “lifestyle inflation” phenomenon, where a person increases their spending once they start making more money. Instead of living larger, maintain your frugal lifestyle and put the extra income towards yours debts or savings accounts.
7.Find a life partner with the same financial values as you
Paying off your debts can be an antisocial, depressing, stressful existence, so having a life partner with whom you can share the financial and emotional burden makes it significantly more manageable. (And while “two can live as cheap as one” is a bit of an exaggeration, it’s not without some truth to it.)
You have to communicate with your partner about money like you would anything else. Money is something you need to talk about if you’re going to be in a serious relationship, probably as early as the second or third date. Because it’s not easy spending just R400 a month in spending money. But you get through it when you’ve communicated your financial goals with your partner.
I hope this helps a whole lot of you :)