It’s five days before payday. How does your current account look? Is it a healthy picture, with savings and bills paid, and a little extra cushion? Or is it in the minus figures, leaving you hoping that no large expenses will come up before your next paycheck? We all know the basics of managing our personal finances – making a budget, having savings goals so we can buy a home or travel the world, and making sure we don’t spend more than we earn. However, in the real world, it can be hard to stick to the plan. Life is full of cost of living hikes, stagnating salaries, impulse buys and unexpected expenses. Budgeting is really one of the hardest aspects of your life to manage, and many people struggle with it. So if you need to make that paycheck stretch just a little bit further, take a look at these tips:
1. Know Exactly How Much You Get Paid
You’d be surprised by how many people don’t know exactly how much money is going to hit their account each month, so make sure there isn’t any uncertainty. Take into account the tax you pay and the essential deductions. If you’re self-employed and your salary can fluctuate drastically from month to month, then work out what your total earnings were last year from your tax return, and then divide that figure by 12 to create a monthly average – always round figures down rather than up.
2. Do An Expense Audit
It’s time to get forensic with your finances. Log into your Internet banking and go through the past three months of transactions to pinpoint where most of your cash is going. Work out costs you have to pay – utility bills, rent payments or a mortgage, loan repayments, insurances etc. Now work out a monthly average for these costs versus your income. The gap is your disposable pay, and if you’re struggling pre-payday, then you need to look at increasing this figure – either through revising your discretionary spending or finding a secondary income stream.
3. Reduce Your Bills
This is the easy part – make sure that when it comes to essential costs, you’re paying the minimum you can get away with. Use comparisons sites to shop around for utility tariffs, insurances and things like your mobile phone contract. Use sites like cardguru to make sure you have the best possible credit rate so you aren’t paying too much interest on emergency purchases, and cancel out any subscriptions you have that you aren’t currently using.
4. Cut Your Discretionary Spending
This is the slightly harder thing, but if you are struggling financially to cover each month, you do need to review your excess spending. Instead of purchasing luxuries like new clothes or meals out on impulse, aim to become more planned in your approach. That could mean prepping and carrying healthy snacks with you so you don’t end up spending to grab food on the go. Or it could mean creating a wishlist where any potential purchase has to stay for a month before you hand over your card. You’d be surprised at how often that burning desire for something fades away given a little time.
Taking back financial control is a beautiful, empowering feeling and a move that you won’t regret. With a few savvy choices, you won’t have to avoid looking at your balance on the cash machine screen any longer!
Photo by Erol Ahmed