The following is a guest post by Tisha Tolar of DebtFreeDestiny.com.
With so much news of foreclosures, defaults, and overwhelming debt, consumers should be looking at their own financial health more closely than ever these days.
However, there are still too many people who believe what they read could never happen to them. These people may feel comfortable now with their money matters but with the scare of job loss and other changes in the financial industry, the reality is no matter where you stand, you need to be clear on your financial matters and be managing your money consistently. If you are not actively involved in managing your money on a daily basis, you are susceptible to debt crisis in the future.
So how do you manage your money if you never have before? How can you improve on your management skills if you have been active in your money matters? Let’s take a look at both scenarios:
New At Money Management
If you have never actively managed your money in the past but want to do better with your finances, the first place to start is your budget. Gather all of your bills and go through each one, writing down who you owe, what you owe, and the due date for each. If you have outstanding balances, note that on your sheet too. Then list all sources of your monthly income, including your wages, child/spousal support, or supplemental income.
Add up your debts for the month and compare the number to your total disposable income. Which one is hirer? Do you have more debt than income? Are you able to cover your debts each month with a good amount of money left over?
If you are able to now see how much room you don’t have to wiggle around with your cash, you have to make a choice. You need to decide if you can more reasonably add more income each month or if you should cut the expenses you already have. You should also get a calendar that is devoted to your bill payments and financial obligations by date. This will help you remain on task for making your payments on time.
You will need to keep your income/debt charts updated each month so you will always know how much “extra” cash you have. This will allow you to then decide what to do with that cash like how much to put into savings, how much is used for spending on needs, and how much you have to play with. This will eliminate overspending.
The trick to proper money management is to stay involved in your finances. You need to constantly update your budget and incorporate new ways to save more money each month. Make money management a part of your daily life so that you can learn to control the money instead of letting your money control you.
Need Money Management Skills Update
If you have always kept a handle on your money management tasks, there is always room for improvement. One area many people overlook when it comes to saving money is to take a second look at the services you are using on a regular basis. People often get so comfortable with their cell phone company, their bank, and other service providers, they forget to keep current on what the competition is doing. Finding better service at a better price with more benefits can save you a lot of money in the course of a year.
Another tip is to be more proactive in your money-saving ways. There are many more resources that highlight the how-to’s of living a more frugal lifestyle than there has ever been because so many more people have become cost-conscious. Look for tips online, among friends and in your community. You might even take it a step further by helping other learn how to save and manage money more efficiently. Start a group in your neighborhood to rally others to get more financially fit. Take a class at the local community center or college that can help you discover new ideas for investments and money matters. Many times these classes are free or at least low-cost. The more you know, the more your money can grow.