By Amber McCartney
It is safe to say that many of us are culprits of not spending enough time looking after our financial lives. We often spend a bit too frivolously, and do not check our bank accounts at the regularity that we should. You could call most of us 'sporadic' financial managers.
However, this sporadic financial lifestyle is not good in the long run. It is easy to end up in debt, in overdrafts and wondering where your money went only two days after payday. You end up looking at Credit Ninjas easy online loans in the hope that they will get you on track.
A temporary loan can help, but you’re still in debt, and the goal is to get out of debt and on top of your money.
So, with this in mind, how do you stay on top of your finances?
Organizing your financial life
Let’s start with the basics. Just knowing when payday is does not constitute financial organization, and having an online banking app doesn’t constitute financial organization.
You want to start managing your finances overall, which means knowing what goes in and when, and what comes out and when. If you do not know where your money is coming and going to and when it goes, it becomes easy to overspend.
Not organizing your finances properly will damage your financial health, and you will end up spending money you don’t have without even knowing it.
Budgeting
One of the key ways to prevent this and get everything in order is to craft a budget. A budget begins by knowing how much you have coming in each month and how much you have going out.
You should also keep track of your bills. Bills like utilities are subject to rise and fall, they won’t always be the same, so it is good to track this. [FlyFin lets you do that easily .] In fact, in your budget for fluctuating expenses it would be best to add a 10% contingency.
You should prepare a checklist so that you can check off all your bills on a monthly basis. If you live with a spouse or other members of a house, you should ideally coordinate your finances into a lump budget to have stability over all finances in your home.
Income vs outgoing
Budgeting means considering both incoming and outgoing money. Your income will let you know how much you have to spend. But your 'outgoingness' is vital to consider.
You should calculate based on expenses you cannot avoid: rent, utilities, insurance, groceries, etc. After this, calculate other expenses, debts, leisure, and so on.
What you have left over you can spend casually and save.
When budgeting it is important to consider both of these as they will paint a clear picture of your overall financial situation.
Wants vs needs
It is important that while you are budgeting you consider your needs versus your wants, and prioritizing where your money goes. You should always cover your needs first and only once you know what is left after your needs are covered should you consider wants. [There is also financing available at SE Financial for those recreational vehicles that may fall into your "wants" list.]
Budgeting often scares people into thinking that they cannot spend on leisure, but you can. It's about prioritizing where your money goes.
Debts & saving
Of course, you also need to cover your debts. Being late on debt repayments will simply end up with you in further debt and digging yourself a deeper hole.
A lot of budget plans will give you a percentage to designate to debt.
For example the 70/20/10 plan would see you use 70% of your income on needs such as utilities, rent, mortgage, groceries, etc. The 20% would be for debt repayments, and the 10% for saving.
Saving is also important. Why? Well, if you save you can prevent yourself getting in further debt by creating an emergency fund through your savings, so next time something unexpected comes your way, you have the money there, and do not need to take out a loan!
Try out financial apps
If you are struggling to juggle your money, consider financial apps. Online banking, financial management apps and budgeting apps can all help, or even all three at once!
They are available online and a lot of them are free. When you choose an app, always check the rating first. Ensure that the app you choose has a good track record and is legitimate and worth investing your time into.
Bill organization
It may seem obvious, but you should also keep all your bills in one place, even if they only come through electronically. If you get bills by mail, you should consider having a file set aside for them in which you store them in chronological order.
If you get bills electronically, keep them stored in a safe place on your PC, and always back them up with a USB, Google Drive, or even Dropbox.
If you only get your bills come through via your bank, try to ensure that they all come through one account. It may seem silly, but this can actually help you manage your money more clearly, as there is less going on, and you can anticipate your outgoing fees easier.
Pay your bills on time
Paying bills on time is imperative; if you do not, you can end up in overdrafts, or increased fees, as well as late fees.
If you get paper bills come through for something you typically pay electronically, always call the creditor to make sure everything is okay and check if changes are needed.
Try out automated payments
Speaking of automated payments, this is a great way to ensure that your bills are paid on time and will help you manage your bills online much easier.
It ensures that you know exactly what is going out of your account and when, preventing you from being late and costs going up due to late fees. If you use online banking, automated payments are super easy to set up and will save you a lot of time.
