Money worries are among the most common causes of stress for US adults. 2020 has been a tough year for many, and financial pressures are affecting many households. If you’re looking for ways to improve your family finances, this guide contains tips and tricks to help you get back into the black.
Getting used to budgeting
Budgeting often tops the list of money management commandments. When you have a budget, you can control spending, make your money stretch further and reduce the risk of wasting your wages. If you don’t already have a budget, and you tend to spend without thinking, getting used to budgeting could have a dramatic impact on your finances and your attitude to spending. It’s so easy to lose track of where our money goes in an age where you can tap to buy, transfer money in a second and make a purchase through an app or website at the touch of a button. Creating a budget will help you analyze your spending habits and highlight areas where it’s possible to make cutbacks. You might be paying for a gym membership or a TV subscription you’d completely forgotten about, for example, or your grocery bill may have increased without you even noticing.
Use your budget to audit your spending, determine how much disposable income you have and make changes. Set yourself limits and portion out your money for different household expenses. If you’ve been spending $100 at the grocery store each week, for example, challenge yourself to lower that figure by $20 or $30. Planning a menu, writing a list, avoiding special offers that aren’t relevant to you and batch cooking can all help you save money.
Most US households are in debt, but there is a huge difference between having debts that you’re in control of and owing money that you cannot afford to pay back. If you’ve taken out a loan from the bank, or you’re paying off a mortgage or a home loan, and you’re on track to make the repayments, you don’t need to worry. If you’re spending on credit cards, you’re borrowing money from different lenders with high interest rates, or you’re struggling to pay bills or outstanding debts, there is a risk of debt spiraling out of control. Tackling debts can help you improve your credit score and maximize the chances of being able to borrow money in the future, as well as ensuring your financial situation doesn’t get any worse. The amount of debt you have will affect your ability to borrow, especially if you’re looking to buy your first home or move to a new house. To determine how much you can spend on a property, you’ll need to look at Total Debt Servicing Ratio (TDSR). This figure is used by lenders to assess applications. If you are in debt, and you’re worried that you’re starting to lose control, it’s beneficial to seek advice. The sooner you can start paying off debts and stop using credit cards and short-term loans, the better. A financial adviser can help you explore debt repayment options.
When money is tight, it can be difficult to keep up with bills and cover household costs. You may feel like you’re constantly paying out money just to keep a roof over your head and food on the table. Some people get into debt because they live beyond their means, but for many families, it’s a genuine struggle to cover the essentials. In some cases, it may be possible to reduce outgoings to free up money to start clearing debts, put in a savings account or treat the family to a day out or a movie night. Simple changes can make a big difference. Take your insurance payments as an example. When was the last time you shopped around for a new policy or switched provider? Many of us tend to roll our policies over, taking the renewal terms offered by our existing insurer without questioning whether it’s the best option. Nowadays, with comparison sites, you can compare insurance policies in a matter of seconds. As a new customer, you could take advantage of better deals and incentives, saving yourself hundreds of dollars on multiple policies over the course of the year. You could also look at money-saving strategies like switching energy providers, altering your TV and broadband package, sharing lifts, walking or cycling to work instead of driving and swapping a gym membership for home equipment you can use for years to come.
Many families find it difficult to balance the books and stay in the black. If you’re hoping to improve your financial situation, hopefully, this guide will prove useful.