In my last article we spoke about the importance of putting money aside each week to pay bills as they arrive.
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| Calculate the amount that is needed over the year and to put a set amount aside each week |
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One way to do this is to calculate the amount that is needed over the year and to put a set amount aside each week.
For some people this is going to be difficult, there just doesn’t appear to be enough money left each week to do this. This is your warning sign; you are living beyond your means.
Recognising a problem is the first step to recovery, there are ways to fix this but you must act sooner rather than later.
There are two ways to address the problem. The choice is you will need to either increase income or decrease expenses.
Examine first the sources you receive your income from – commonly this will be through your wages or via government benefits. If you are on wages consider whether you are in a position to ask for a pay rise.
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Look at your skills and hobbies; can you turn them into income? |
This is going to be tricky as a lot of businesses are struggling right now but if you can deliver some tangible benefit to your firm then it’s worth a try.
It may be possible to take on a special project that you can lead to a ‘bonus’ payment or you may be able to simply put your hand up for some extra hours if they are available.
It’s easy to get into a rut if you are on government benefits but it’s always worthwhile reviewing your circumstance to see if you can return to the workforce in some capacity.
Spread the word that you are looking for some extra work – you never know what might turn up, after all no one will know you want extra work if you don’t tell anyone!
Then we come to considering some one off income sources. Can you sell some items you no longer need, could you use E-bay or have a garage sale? Look at your skills and hobbies; can you turn them into income?
Could you offer some tuition, bake birthday cakes, do some babysitting or provide handyman services?
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| Pack a snack box when out with the children |
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On the expense side, if you have made a list of all your bills then this exercise is really going to highlight where your money goes. All insurance policies should be reviewed, shop around.
There has got to be some savings to be had as far as phone and Internet expenses are concerned, once again shop around and even if you are in a contract give them a call.
There are some real wins to be had here, but you need to pick up the phone to ask, they are not going to land on your doorstep by themselves.
Electricity, gas, water – get the whole family involved in a challenge to reduce waste. Go through each expense one by one, a few dollars here and there is going to make all the difference.
Meanwhile, avoid the avoidable; you should definitely be going out of your way to not incur overdue fees and penalties, bank charges, late fees, fines etc.
If you are struggling with bills then you will also need to also review your discretionary spending – food, clothing, gifts etc.
Get really creative here - revamp clothes, make gifts and toys, take lunch to work, pack a snack box when out with the children, walk when you can avoid the drive.
However tempting it may be, taking on more debt is often not the answer. We are often offered credit cards, credit card increases, finance, bank loans, car loans, long term rental contracts etc.
The golden rule is just because it’s offered in doesn’t mean we should take. These are often short term fixes and an easy way out. What we are looking at is some long term changes to the way you approach budgeting.
Small steps now will lead to big gains later – give it a go there’s nothing to lose!
Photographs from Microsoft Office.