(Akiit.com) In the US alone, consumer debt is at an all-time high, with statistics showing that the average household owes around $15,000 – and that’s just credit card debt, so not including other credit such as loans, overdrafts, and mortgages.
Whilst no one is here to say that all debt is bad, measured equally, or is something that people should be ashamed of, it’s also important that it doesn’t become out of control – because this can cause a lot of issues, including stress, and even the breakdown of relationships.
Debt that is spiraling out of control and becoming difficult to manage is not something you should ever have to suffer with, and there is definitely a lot of help and resources out there to get you and your finances back to normal before it becomes overly problematic for you.
However, the best way to manage debt is actually by prevention, so we’re going to give you some simple tips to help you keep your finances in order – even if you’re someone who doesn’t consider yourself to be great at managing money or even the practical aspects of your life.
Learn To Budget:
You’ve no doubt heard it before, but where do you even start with creating and sticking to a budget? To be honest, there isn’t just one way to go about it, and how you budget will ultimately depend on your personal circumstances.
Budgeting doesn’t mean depriving yourself of the things you like, but it’s just creating a simple way of tracking how much money is coming in and where it’s going. This way, you’re more in control and will be less likely to receive any unexpected surprises when looking at your bank balance.
Create A Fun Fund:
Getting your finances in shape doesn’t have to be boring or restrictive – in fact, it should be quite the opposite. The goal here is to make sure you know where you’re money is going, so that you can do the things you enjoy knowing you can completely afford them and then have no pressure hanging over you from those things.
The best way to do this is to create a fun fund or rainy day fund. You can either have this in your house and simply add some cash to a box or piggy bank anytime you get paid, but one of the best ways to do it is to set up an automatic transfer each month to a separate bank account just for this purpose.
Due to the fact that the money comes from your account each month automatically, you won’t miss it and you can then use this to pay for fun activities throughout the month or keep saving for a bigger purchase, such as a vacation.
Start Making Cuts:
A $4 cup of coffee on your way to work, or the $10 you pay for Netflix each month doesn’t seem like much at the time, but these things soon mount up – especially when you add on more subscriptions or payments that also don’t seem like a lot. You certainly don’t have to give up on things you use and enjoy, but instead of buying a coffee, you could make one at home to take with you and over 30 days, you’ll see how much you’ve saved. Then you can start looking at other non-essentials you could be cutting out to help you make savings.
Be Strategic With Credit:
Credit in an of itself is not a bad thing, but like everything it’s always about the intention behind it. Are you taking a credit card simply because the guy who’s selling it really twisted your arm and made it seem like a great idea? After all, you really do want those beautiful shoes, and you can easily afford the monthly repayments, so where is the harm?
Or, are you thinking strategically about the fact that taking a credit card to help build your credit rating could be a good idea because you want to buy a house in 3 years? Always be strategic when taking credit, and if it doesn’t align with your goals, then it’s time to walk away.
Shop Around:
When it comes to getting the best deals on anything, the internet is your friend. Whether you’re looking for home insurance, car insurance, or even the best deals on banking, price comparison sites and even review sites are going to be of great help in getting the best deals and making you some significant savings.
Of course, if an offer seems too good be true, it usually is, so use some common sense, don’t just jump on the first thing you see, and always read the small print – yes, it’s boring, but knowing what you’re getting into could help you ward off any financial loss or even a lawsuit from a personal injury lawyer if you don’t have the correct insurance to cover you.
So, there you have it. Some easy and effective ways to get to better grips with your finances so that you’re in control – not the other way around.
Staff Writer; Larry Parker