·Perform a Cost Analysis
It is important to know where you are, financially, today. Be aware of your debts and expenses, what you owe on your credit cards, home loans, student loans and/or other types of debt. Also make a note of your fixed payments.
·Live Within Your Means
We’ve all heard it said many times before, yet how many of us actually apply this mantra to our spending habits? A step in the right direction would be to eliminate your credit card debt entirely by no longer using credit cards and paying off existing balances. If you are unable to say goodbye to credit completely, make it a rule to never buy luxury items on credit but, instead, save to buy them in cash. Remember, credit is essentially spending money you don’t have.
·Save For Short- and Long-Term Goals
These could include taking a holiday, having extra money for maternity/paternity leave, or buying a car in cash. Ask yourself: “What do I want most and how much do I need to get it?”. Separate these wants/goals into ‘must-have’ and ‘wish’ lists, respectively. Order your longer-term goals according to their importance, and add up how much you will need to achieve both your short- and long-term goals.
·Keep a Spending Diary
This is probably the most important money-managing tip out of all of them! Check where your money goes, and where you can cut back on spending, by keeping a record of all your payments in a spending diary. Use the diary for both small and large purchases. It will take some diligence, in your part, but will be more than worth it in the end!
·Create a budget
Set up a budget to record money coming in and payments – make use of your spending diary in order to ensure your budget is realistic. (Make sure you also include once-off expenses.) To help you do this, use an online planner, which adds figures for you and gives you a breakdown of where your spending goes – you will soon realise the benefit of categorising your spending. Include savings in your budget and track how well you spend it, again, by making use of your spending diary.
·Save, Save, Save!
The second most important tip, to keeping a spending diary, is to save regularly by putting aside money into a savings account. It helps to do this as soon as you get paid; consider even setting up a debit order to pay yourself first. Be sure to increase this amount in the events that you obtain a raise in income and make certain that you are receiving a competitive rate of return on your savings. Try to put any extra money that comes in straight into your savings.
·Face Your debt
Knowing you are in debt is one thing, but attempting to face your financial issues requires some courage. Take a deep breath and open the letters/statements you have been ignoring. It is better to know what you have to deal with then try to put it off only for it to get worse! If you are really in trouble, consider debt counselling.
·Be Smart When Paying Off Debt
Pay off debt that charges the highest interest rates first (e.g.: credit/store cards charge a much higher interest than personal loans). You must, however, still pay the minimum/required amounts on your credit cards/loan agreements. Try to pay your bills on time to avoid late charges, i.e.: get into the habit of paying them as soon as they arrive. Do not borrow money to pay off an existing debt – this will only result in a never-ending spiral of debt. Develop a realistic plan to pay off your debts and, while you can afford it, make additional payments into your bond/unit trusts. Alternatively, apply for debt consolidation.
·Save For a Rainy Day
It helps to have an emergency savings made up of approximately 3 months’ worth of expenses. Place this money into an easy-to-access account, ready for a rainy day. Furthermore, should you know of a lump sum payment coming up, start putting money aside, monthly, now so as to lighten the load.
As your savings grow, set up an investment plan
·Get a Credit Report and Find out your Credit Score
Review your credit report as soon as possible. You can obtain a free report from www.annualcreditreport.com. Once you have received your report, check it for accuracy. Once you have acquired your credit report, obtain a credit score. This score can range between 500 and 850 and, the higher the number, the better the rating and the more chance you have of gaining more credit at a lower rate. You can purchase your credit score through a credit-reporting agency after receiving your free annual credit report.
·Use Legitimate Financial Institutions
Open a cheque/savings account at a FDIC-insured bank (Federal Deposit Insurance Corporation), savings and loan or credit union. If you already have these accounts, do some research to make sure that your choice of a financial institution is, in fact, a legit one. Lastly take a look at your banking fees and see if there is any way you can save on services/insurance.
·Break Bad Habits
Break bad financial habits, like drawing from an ATM that doesn’t belong to your bank, and you will save a lot on service fees.
· Identify the Right Time to Shop
Do not go shopping when you are hungry. It’s a known rule that has been proven over and over again. Just don’t do it.