Keeping your finances in control is always important, but it is even more important in this weak economy. One never knows whether the situation will improve or even worse, economically, so the importance of budgeting for our financial security cannot be overstressed. That is why we have collected the following five tips that should help you achieve your financial goals.
1. Maintain a Budget
It is curious how few households even try to keep track of their monthly spending. The result, for most households, is a financial mess that no one knows the head or tail of. When you don’t know what you are spending your money on, you cannot decide what you have to cut to reduce your spending. Therefore, it is important that you keep a budget, and track your spending and income for every month. This should inform you about your spending patterns, and caution you against overspending.
2. Avoid recurring Liabilities
Recurring liabilities are the kind of services for which you have to pay a monthly or weekly fee. It may cost as low as a cup of coffee you have every day after lunch in your office, or it could be your costly phone plan that you barely use to its fullest extent. These types of liabilities seem cheaper because we do not pay for them at the same time, but over the longer periods, they add up. A cup of coffee everyday may cost you as much as the price of a car over 20 years.
3. Shop Smarter
A behavioural sciences study was reported to have observed that people who ate a meal before going for shopping spent lesser than people who were hungry when they were shopping. The result may seem surprising, but it is not hard to explain. When we are hungry, we are prone to feel attracted to objects that can satiate our need; and shopping can serve like such an outlet.
This technique, of not being hungry when you shop, is just one of the many techniques of shopping smarter. Another is to use vouchers to save on your grocery and other kind of shopping.
4. Use Personal Financial Services to Remain under Budget
Services like Money Dashboard, which is a mint.com site but made for United Kingdom residents, allow you to keep track of your spending by collating your various financial accounts in the same login. Such services can not only inform you about your spending patterns, but also inspire you to spend well.
5. Increase Your Income
Strictly, this does not come under budgeting. However, it is hard to overestimate the importance of increasing your income to meet your financial goals. The harsh truth of life is that even the best budgeting cannot allow you to buy something that is just out of your reach financially. The only way to achieve costlier goals is to increase your income. Therefore, whenever you are talking about finance, and budgeting yourself, think about how much you will be earning in the future, and try to increase it.