Ways to Effectively Manage Your Finances

Thursday, July 5, 2012, AM | Leave Comment

Today it’s been hard to find good news at all about the economy, stock markets, home values and jobs. People are struggling to find work and pay mortgages they can no longer afford.

Retirement accounts keep going down, groceries keep going up, businesses are closing and we see layoffs every day.

The bottom line is we are facing some pretty tough economic times.

Of course there isn’t an easy fix to financial problems, but families need to take some steps now to maintain better control of their budget and finances with the economy the way it is now.

By doing so, you can relieve some of your stress.

  1. Budget

    The first thing everyone should do is prepare a good budget for the entire household. Plan how you are going to spend the money you have coming in.

    A budget helps you to really realize how you’re spending money unnecessarily. Without a budget you can get into debt quickly.

    Figure out what the top priorities are. Put down your income and expenditures you have monthly. Include your food bills, housing, clothing, insurance, car payments, loans, credit card payments, entertainment and anything else you spend on.

    If you are spending close to what you make, someone needs to think about a second job to start paying things off.

  2. Means

    Financial advisers say that one of the best ways to live is below your means, not within your means.

    Find ways to cut expenses around the home by cutting coupons, shopping at consignment shops, eating at home more than eating out, and cutting your own grass instead of paying someone to do it.

    Lower the heat in the winter and the air in the hot summer months to save a bit on the bills. Let the kids get involved as well in saving money.

    Turning the lights of in bedrooms and other rooms when no one is using them can save a lot of money.

  3. Avoid Credit

    Don’t buy non-essential things that you really don’t have to have on credit. With the economy the way it is now, the last thing you want to do is build debt.

    People are still losing jobs and if something happens to yours, you don’t want to be stuck with a lot of debt.

    If you get bogged down in too much debt you begin to feel that you are a slave to the creditors. You won’t be able to use your paycheck for things you want or need because it will be going to the credit card companies.

    If you can cut up your credit cards, you can begin paying down debt.

  4. Pay Debt

    Paying off existing debt if you are currently debt is something you need to do. Have some garage sales, reduce expenses at home and use all the extra money you make or save to pay off debt.

    What is ideal is to lower your expenses enough that you can make an extra payment over the minimum payments on your debt.

    Even if it’s only $75 a month, it will help reduce the debt. Always go for the bill that has the highest interest rate to pay down or the bill with the lowest balance.

Managing your finances better will give you peace of mind and help you find a way out of the hole of debt you may be in today.

Craig Pearson writes about finance, frugality, and quotes for homeowners insurance.

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