Taking Back Control of Your Money
Is There Any Hope For My Finances?
We all need money but often there is not quite as much of it available as we would like or need.
Also finances sometimes get out of control and we find ourselves constantly trying to catch up on bills which seem to come in at a faster rate than we earn, meaning cash runs out before all the bills are covered and some payments have to put off until a later date, creating financial pressure and stress.
Knowing how to cover all the expenses we are facing can at times be a challenge, however learning some simple keys can help make this process more manageable, enabling us to take back some control of our money.
Do you feel like you are in control of your finances?
Develop Some Financial Discipline
If you are committed to getting in control of your finances, you need to be willing to develop some self-discipline, particularly in the area of your finances.
It may seem simpler to neglect this discipline and simply deal with financial issues as they arise, however if you want to get in control then this discipline is necessary.
The areas you need to develop discipline in are:
- Your Spending
- Writing Things Down
- Establishing Priorities
Out of Control Spending
Let's consider some financial tips to help you get in control of your cash.
If you spend more than you earn, then debt is sure to accumulate, and money will get tighter.
You need to spend within your means, and know what you must say, 'no' to.
This means learning to say, 'No' to yourself, to offers, to new debt, to new store cards, to sales online or in shops etc. You need to be able to walk away from a sale or an offer no matter how tempting it is.
Learn to stop being impulsive and realistically think through whether you can afford that item or offer. If not, then you need to say, 'no'
Impulsive buying can often lead to spending money you need for priorities on things that can wait until later.
Seeing a new dress on sale that you want 'right now' may feed a need within, but can cause you to spend money you don't really have available.
It can also lead to debt, when we use a credit card or store card that we are already struggling to pay each month or sign up for a new card which we really can't afford in our budget right now.
Learning how to say 'no' to yourself is an important part of getting on top of your finances, so stopping the impulsive spending is essential if you want to gain control of your money.
Sales in the shop create temptation to spend when you do not have the cash to buy things.
Discipline with Cash in Pocket
It is easy to spend money if you have it on your person, without properly tracking it.
I have found that money in my wallet seems to go down faster than money in my bank account because spending a few Dollars 'here and there' initially seems like I'm not spending much, but if you do it multiple times in a week it adds up to a larger amount.
Discipline yourself with how much you allow yourself to carry on your person, and know what it is for (if some is for petrol or food, keep it for that). If you know that some of it is for spending, then stick to that amount.
Be willing to make some temporary sacrifices to bring out of control finances back into balance
Unnecessary Late Fees and Charges
Recognise the effect that paying some bills late will cause and put effort into paying bills and debts on time.
Some bills will incur a late charge, meaning you are paying more than you needed to if you had covered the bill on time.
Paying late or skipping a payment one month may seem to put the bill off until a later date, but in truth it delays and amplifies the problem.
You may also incur bank charges if you allow direct debits to 'bounce' due to insufficient funds. Again this may seem like a quick fix to financial needs now, but makes your bills and debts larger next month.
Identifying these in your budget, and making it a priority to get these paid on time can mean you have extra cash available in the long run.
Learn to Keep Track
Keeping a record of your finances can seem like too much hard work, but it is essential if you want to take control back of your money.
It is important to write down a plan (budget). Keep a record of your spending, upcoming bills, what you need for food and what income you are expecting in the next few weeks
It does not need to take hours of your time once you have the budget set up, but it is important to keep a record of spending and income.
Establish Your Priorities
You need to decide what is most important to spend your money on, where your priorities lie.
If you do not establish these financial priorities, you will end up using money on less important things before covering the important expenses, leaving those unpaid.
This means deciding what is most important to spend your money on first.
Ask yourself if getting out of debt is a priority to you.
Are the new clothes you saw in the store more important than making sure your family has food to eat that week?
Remember that each bit of money can only be spent once, so once you have used it, it is gone. If you spend it on a low priority, the higher priorities will suffer.
Financial Priorities Example
Car service soon
Have a Plan
As you take back control of your money, you will want to make a plan and set yourself some goals.
Your plan will include major goals as well as smaller goals to achieve along the way.
Maybe your ultimate goal is to be debt free, however smaller goals along the way would be to reduce debt in half in a certain amount of years, or to pay off a particular debt or credit card.
You may have a plan to own your own home, however in order to do so smaller goals will be needed to make you financially stronger. These may include a plan to build up a particular amount of savings for a deposit on a home.
Take the time to think through where you want to be financially, and what realistic steps will be needed in order to get you there.
Ask yourself what sacrifices you need to make now in order to achieve your goals.
Attack the Debts
Debt can sometimes take control of your money, particularly if you have built up a large amount of loans, credit cards and store cards.
If you want to have control back in your hands, you need to deal with the debt.
This will include being disciplined with yourself to stop spending impulsively on your credit or store card; or taking out new loans.
Set yourself the goal of paying off certain debts and clearing them out of the way for good.
It may be worth checking the interest rates on your various loans and cards. Identify which have the highest interest rates and put more effort into paying them off first. Money you are paying to cover interest each month is money you would rather free up to pay other things, so you want to reduce how much interest you are having to pay.
As you pay loans and cards off, this will release extra money each month which you can then redirect onto other things.
However once you clear off a debt, and no longer have that particular payment to cover each month, do not immediately use that spare cash on luxuries. You are already used to that money being spent each month to pay debts, so keep putting it toward other debts for a while longer.
Take that spare cash and add it onto what you are paying toward the next debt you want to clear. This will cause that debt to reduce faster.
As you clear off debts, the process to being free from them will pick up pace. However it takes discipline and commitment to not allow debt to have control of you.
Put Money Aside for Emergencies
Have you ever been hit with a sudden expense which you never planned for and found yourself short of money to cover the emergency?
Maybe your car broke down suddenly, or your pet became sick and needed urgent attention from the vet. Something like this has probably happened to all of us.
It can be hard to plan for an emergency because you never know when they will occur. You may go months without one, then get hit by two or three at the same time.
However it is wise to make a point of setting some money aside to cover an unexpected emergency. If you do, then at least when something happens suddenly, you will have cash available to either fully or part cover it (depending on how much you have managed to set aside).
Putting aside emergency cash sometimes feels like a low priority, and it seems more pressing bills use up the money before you can save any. However I recommend making emergency cash one of your priorities.
If necessary, lower your grocery bill for a week or two in order to save for a crisis. Hold off on some other spending for a few weeks if necessary (like the new dress you may want).
When an emergency strikes, you will not regret having prepared for it and you will appreciate not having to quickly draw from money you need for something else, or getting into more debt to cover the problem.
Financial Set Backs
There are things which arise which you cannot plan for, and which can temporarily throw the entire plan.
For example you may have felt you were in a stable job, but suddenly find yourself losing it, causing a temporary drop in income.
These set backs happen, but they do not have to stop your over all plan. Make temporary adjustments to the plan if necessary to get back on your feet and back on track with the goals.
Stick With It
Taking back control of your money will take time. Depending on how 'out of control' things are will determine how long but it is important to stick with it. Do not allow money to beat you, but stay with your plan to be debt free and in control financially.
Be willing to make temporary sacrifices to help you reach your goals and develop the necessary self-discipline.
When you begin to achieve your goals, you will look back and feel it has been worth it.
All images used on this Hub are courtesy of freedigitalphotos.net