Looking after your finances is a difficult task. So many things are out of your control; taxes, the cost of food, the cost of petrol, and many other things that will be discussed in this article. Of course, what is within your control is the way you use your money in terms of expenses over which you have free will. In fact, as will be touched on in the first point, sometimes you have free will over some necessary costs in life; utility bills and food are two such examples.
Curb excessive spending.
Your very first task needs to involve the things you can control in your life. You can’t control the costs of petrol because you need to drive to your job. You can’t control the costs of rent or mortgage payments because you need a roof over your head. However, there are necessities that you can control. You can control your utility bills because you can start to be smarter about the amount of electricity or water that you use. You can have shorter showers, you can turn off lights when you’re not using them, or you can even insulate your walls to better trap heat in the house and reduce those energy bills. You can also control the cost of food. You shouldn’t cut out essential proteins, nutrients, and other things that you need in your diet, but you can make smart decisions to buy things in bulk because it works out cheaper. You can also go for the cheaper supermarket brands to save a heap of money on certain food products too.
Of course, what you really need is a budget, because your excessive spending might extend beyond necessities. It’s when you start spending beyond your means on nights out and other luxury treats that you can’t really afford. However, having a budgetary limit might help to curb this excessive spending because you’ll have a physical figure in your mind that you can’t exceed. It’s easy to tell yourself that you can afford something if you haven’t been keeping track of your spending. After necessities, include a figure for disposable income in your budget and stick to it rigidly. Spend less than you earn each month and you’ll be safeguarding your finances. It’s as simple as that.
Invest your money and use your assets.
This is a slightly different way to safeguard your finances but it’s one that you certainly shouldn’t dismiss straight away. The best way to protect your strongest assets is to multiply them. That might involve investing your money in stocks and shares, but you have to be ready to dedicate your time to observing the market carefully. If you want to use your existing assets to generate revenue then you could consider routes such as renting out a room in your house to bring in a little extra income each month.
There’s no point in letting unused space in your home go to waste. Whether your kid has grown older and left home or you’ve always had a spare room in the house, you could be using sites such as Airbnb to rent out this space to temporary tenants and bring in a steady stream of income. Your house is a valuable commodity and it could be bringing in money through hidden routes that you didn’t even consider.
Think about the household.
Most of your finances will stem back to the household, at the end of the day. Your bills at tied to your home, for starters, but it’s also about your family; people are the ones who control money, after all. It’s not about numbers on a sheet of paper. It’s about how you all contributed to those numbers. You need to start working together as a family to better look after your money. Maybe you’re the sole earner for the household or maybe you have a partner who works too (perhaps some of your children even have part-time work if they’re now teenagers). The point is, everybody needs to start thinking about the ways in which you use money. As mentioned earlier in this article, the best way to look after your funds is to avoid spending them excessively in the first place.
You might want to check out great resources such as family money magazine to help you on this subject. There are many different small expenses that you, your partner, and the kids rack up that add up to a huge expense at the end of the month and even huger by the end of the year. Start thinking about whether you need to buy that slightly bigger toy for your little one or whether you need the latest generation iPad. Even if you ignored the first point in this article because you’re not an excessive spender, everybody’s guilty of missing tiny expenses in their day to day life that they really could have avoided altogether.
Insurance.
It’s so important to insure your most valuable assets in life. That includes your car, your house, and even you. Car accidents can hit pretty much anybody, no matter how good or bad a driver you may be; you have to consider that other people on the road may not be good drivers. Burglaries, fires, and freak weather conditions can strike any household and leave costly or even crippling financial damage behind that you just wouldn’t be able to cover without insurance.
As for yourself, if you’re not insured in terms of your health then you could be racking up astronomical bills at hospital if you’re ever injured at home or at work. Insurance costs may seem a little bit annoying, but they’re a much better alternative to the costs you’ll incur when things go wrong in your life and you’ve got no financial safety net.
Your income.
Finally, you might simply want to take a look at your cash flow. If you don’t think you’re earning enough to cover the necessities and any additional costs you might rack up during the average day, week, or month then you might want to consider routes towards making more money. You could start doing freelance work in your spare time at home or push for more hours at your current job (perhaps even a promotion).
