Clever Money Management: How to Keep Your Finances in Good Shape

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We all need to manage our money well. This is a standard skill that you’ll use on a day to day basis. Failing to manage your money properly can result in debt, which results in a poorer quality of life, stress and other consequences that are better avoided. Of course, money management isn’t something that we’re taught in school, and it isn’t something that all of our parents teach us. But hopefully, some of the information provided below will really help you!

Budgeting

The first big skill when it comes to managing your money is budgeting. Having a budget can clearly outline how much money you have available, how much needs to go out on essentials and how much you’re left with to spend as you please. It can prevent you from overspending and it can prevent you from slipping into debt that’s difficult to get out of. The first step to take is to determine how much money you bring home each month. This isn’t necessarily your salary divided by twelve. There will be taxes deducted. Make sure you’re using your take-home pay. Next, deduct your essential outgoings – the things you have to pay to avoid eviction, essentials being cut off or bad credit. This could be your accommodation, energy bills and payments like finance agreements or contracted payments. The sum you’re left with is your disposable income and this is what you have available to spend each month without going below zero.

Take What You’re Owed

All too many of us forget or give up trying to get back money that we’re owed. It’s important that you take what you’re owed to keep your bank balance up. If you’re owed money by someone, you should request it back – if not in full, in smaller and more manageable sums. If you did work that hasn’t been paid for, send invoice and payment reminders. If you struggle, use Solicitors who can help.

Clearing Debt

Already in debt? You need to make sure to clear your debt as effectively and quickly as possible. Most debts have an interest rate attached, which means you pay back more than you owe. The faster you clear your debt, generally, the less you will pay back in total. Clearing your debts can also help your credit rating. Some ways to clear debt include:

Disposable Income – contributing a larger percentage of your disposable income to clearing debt will help to clear it faster.

Balance Transfers – if you have credit card debt, some card providers will offer you an interest free period for transferring the balance to them instead. This can give you some time to chip away at your debt without accruing interest.

Debt Consolidation – debt consolidation is when you put all of your debt in one place to make it easier to manage. You can take out a debt consolidation loan, use it to clear all of your individual debts, then pay that one lender back in monthly sums.

These are just a few key steps to practicing proper money management. Hopefully, each will make all the difference and really help you out.