For the average household, the money coming in never seems to match the money going out. Which is why every pay day, we face a lot of stress in deciding what to spend the money on, how much and when.
We all want to live well and comfortably without busting our budget. We want to have the right amount of money when we need to pay the rent, utilities and other necessary expenses but still have some money left to buy those things we want. Oh, yes we want to have “financial control” as economists have put it.
Budgeting finances is the key to have that financial control we have all been dreaming of. Budgeting finances isn’t as complex as Differential Calculus or as abstract as Symbolic Logic. Budgeting finances is equal to Common Sense.
Below are five simple keys to financial control:
1. CUT THE CREDIT CARDS
It is best if you don’t use credit cards, or even own one. If you think you’re responsible enough to use it in emergency situation, then leave one for those times. Buying a Gucci dress for a hot date isn’t an emergency situation. Paying for school tuition fee or electric bills is a right example of emergency situation.
Only fools keep more than one credit card. If you want to go down the pool of debt then own ten.
Keeping ourselves away from temptation is the first step to effective finance budgeting and financial control.
2. ELIMINATE WASTE
A new pair of shoes is considered a waste if you still own four workable sets of pumps. Expensive toys that you just display on the dusty corner, the set of paperbacks lined on the bookshelf but left untouched, dining out when you can cook at home, are all waste of money. Whenever you feel the impulse to shop and dine for your pleasure, why not try this little experiment: estimate the amount you’ll possibly pay for giving in to your heart’s desire, then set the money aside, put it in an envelop, seal it, and open it after six months. When you see how much you’ve saved, you will, undoubtedly, never buy impulsively again.
3. START TO COUNT IT ALL DOWN
Many people don’t even know where their money is being spent. To them, budgeting finances is simply laying out the money on the table, apportioning them in envelops, and labling each envelop with Bills, Rent, Amortization, Transportation, Food.
But budgeting finances require a pen and a notebook. Input the incoming money and the outgoing money, find the difference, and voila, your personal budget right in front of your eyes. Write in a separate sheet all your debts, recurring expenses and future expenses (such as yearly fee for life insurance or health card). Writing everything down will help you see when you spend the most and for what purpose, and how much you must raise for future expenditures.
4. DECREASE DEBTS ONE AT A TIME
The amount of debt left unpaid increases overtime due to interest rates. To keep yourself and family from sleepless nights due to debts, start budgeting your finances with special interest on decreasing debts.
Write down in your budget pad or software every debts you have, even the small ones. Number them according to importance. Between a house mortgage and a car mortgage, label the house mortgage as 1.
Then study your budget pad. Could you cut down expenses on utility bills or transportation? If yes, how much would it raise to add up to fund the mortgage? Study all possibilities of cutting down your expenses.
Take advantage also of the amnesty program that banks and credit card companies offer. Most especially the credit card companies, they offer payment of principal amount less the padded interest. Having been able to settle one debt is already a big leap to financial control.