How to Get Your Spending on Track This Fall
Feel like your spending habits are spiralling out of control? Fall is a great time of year to take stock of how you manage your money and start budgeting for the better. Here are 5 steps you can take to make the most of your cash.
Set and maintain a budget
Budgets can help you keep control of your spending and better understand where all your money is going. Many people grimace at the word budget; however, budgets don’t need to mean the end of any fun in life. They just need to be viable. Essentially, you need to make sure that your outgoings do not exceed your incomings. To do this, you should take stock of how you spend your cash. Everyone has both fixed costs and variable costs. The fixed costs are those expenses that you must pay regardless of what happens in a given month; for example, rent or repayments on a loan. The variable costs are those that change from month to month; for example, the amount of money you spend on food or entertainment. If you are consistently spending more money than you earn (and increasing your earnings isn’t an option), you need to reduce your variable costs. Set a budget in which you outline the maximum amount of money you can spend on each variable and make sure you stick to it.
Make sure you have a contingency fund
If you are living hand to mouth, you need to stop that right now. You do not know what waits around the corner. You may lose your job, fall ill, or find that you suddenly need access to cash for a great investment that you don’t want to miss out on. You should aim to have at least three months’ savings put aside at any one time. Ideally, you hold this in a high-interest savings account and keep adding to it on a monthly basis.
Assess your net worth
On a monthly basis, take a look at how your total assets stack up against your total liabilities. Deducting your total liabilities from your total assets will give you your net worth. Ideally, that value should grow on a monthly basis as you pay off debt and increase your assets.
Stop buying things you don’t need
It’s very common for people to enjoy buying things. In fact, the act of purchasing can be a source of joy. However, such joy is typically short-lived, and the excitement soon fades. Sadly, the hit on the bank balance does not. Monitor your buying behavior and try to make logical decisions when buying a new product or service. Ask yourself: Do you really need it?
Don’t put off saving for your retirement
Your retirement may seem like an eternity away. However, you should know this: It’s much sooner than you think. That someday will be here before you know it, and if you don’t take actions in the present, you’ll find that your future will be much poorer for your short-sightedness. What’s more, if you don’t put aside money for your retirement now, you’ll miss out on the compounding interest effect. Even if you start by making small contributions, every little amount helps.