5 Easy Ways to Take Control of Your Finances
Does your hard-earned cash seem to disappear from your bank account all too quickly? Do you find it difficult or impossible to live from pay day to pay day without using your overdraft or credit card?
Taking control of your finances will help you keep more cash in your pocket and allow you to save money each month.
Here are five easy ways to take control of your finances today.
Check Your Bank Balance Each Day
Often people spend more than they can afford because they over-estimate their disposable income.
One way of monitoring the amount of money you have available to spend is by checking your bank balance frequently, at least once a day.
There are several ways of doing this:
· using a personal finance app, such as GOKONG, on your smartphone
· logging into internet banking
· checking your balance at an ATM, but be aware that some ATM providers may charge you for this service
· receiving text messages from your bank.
If you monitor your bank balance each day, you’ll be aware of exactly how much money you have at your disposal.
This will help you make better purchasing decisions based on your true financial situation on that day, thus reducing the risk of overspending.
Set Money Aside and Pay Bills on Their Due Date
One clever way of taking control of your finances and saving money at the same time is to transfer money into your savings account to cover bills that you know will become due in the next month.
It’s best to do this on pay day.
When your bills arrive, don’t pay them early but wait until the day they become due. Then use the money you’ve set aside in your savings account to pay them online.
This way, you’ll have earned the maximum amount of interest on the money in your savings account.
At the same time, you’ll have the security of knowing you have enough money to pay your bills, so you don’t have to resort to using a credit card.
Use Your Credit Cards Sensibly
If you purchase something with your credit card, try to place the equivalent amount of money into your savings account as soon as possible, either on your next pay day or before, if you can afford it.
Then, when your credit card bill arrives, pay it in full on its due date using the money in your savings account. You’ll have earned a little interest on the amount due and you won’t have to pay the credit card company any interest.
If you’ve made a large purchase that you can’t afford to pay for in full in the following month, divide it up into several equal amounts. Each amount should be easily affordable for you to pay each month.
Set up an automatic transfer into your savings account for this amount on pay day each month and pay it to your credit card company on the day it becomes due.
Cancel or Amend Subscriptions You No Longer Need or Rarely Use
Perhaps you signed up for a gym membership last January but, by February, you were no longer able to go because of work commitments.
Or, you may have subscribed to a magazine that you’re no longer interested in. The unopened magazines are piling up, but somehow or other, you don’t get around to canceling your subscription.
Schedule an hour in your diary to look through your bank statements online or via your personal finance app and flag up all your subscriptions.
Cancel those you no longer use or need.
See if you can reduce the cost of the others by amending your cable TV subscription to include only the channels you actually watch or changing your cell phone plan to reflect your exact use of data over the past few months.
You’ll be surprised at how much money you can save by doing this. Even if you canceled just two subscriptions that cost $40 a month in total, you’d save $480 in one year.
Keep a Spending Journal
A spending journal can help you find out why your money seems to disappear so quickly each month.
Each time you spend money, use an app on your smartphone such as Notes or Evernote or a notebook and pen to make a note of:
- the date
- exactly what you spent money on (for example, a takeout coffee, a newspaper, a sandwich)
- the exact amount of money you spent.
While you’re keeping your spending journal, don’t change your spending habits. At this stage, it’s important to record your spending patterns for at least two weeks.
Then, add up your daily and weekly spending totals and look for ways to reduce your overall spending.
Set yourself some targets for reducing your expenditure. You may decide to buy three take-out coffees per week instead of five, or you might take lunch to work with on Mondays.
Continue to track your spending and monitor your progress each week. Set yourself new spending goals until you believe you’ve achieved a good balance between spending and saving.
The Benefits of Keeping Control of Your Finances
If you use these strategies to take and keep control of your finances, you’ll find that you can go from pay day to pay day without borrowing money.
You’ll also manage your spending better, allowing you to increase your savings and/or reduce your debt.