A few years back, I was always in the very frustrating place where bills would constantly
pile up and yet I had no money to pay them off (If you have ever been in this situation then
you probably that it can be really stressful and hard on you). The good news is that,
over time I did manage to prowl my way out of this situation, and you can too. Therefore,
in today’s video, I’ll be sharing with you all tips, tricks and strategies that you can use
to get out of this situation, and hopefully get ahead in your own personal finances. Stay tuned.
However, before I get into the topic, do me a favour – subscribe and hit
that like button because it really helps with the YouTube algorithm.
Thank you, and now let’s get into it.
Alright, so, the list begins with… 1. Keep track of your spending.
You’ve probably already heard this a million times and you are going to hear it again today,
simply because it works and because you are probably not doing it. Basically, it should always
be a priority. Make sure that every single penny you spend is clearly accounted for. The basic goal
of expense tracking is to find and get rid of inefficient spending patterns in your financial
life. Additionally, maintaining control over your finances and encouraging better financial
practices like saving and investing will come from continuously keeping track of your costs.
Basically, in the words of Peter Drucker, “If you can’t measure it, you can’t manage it”.
So this is what you should do to get in control of your spending habits: First,
analyse your categories of spending to determine which are the most crucial. Perhaps you might
even find out that you've been paying for a subscription that you’re not using (I know I have,
and maybe you are too). Most people consider that cutting back on these
“non-essential expenses” is a wise approach to saving money. You might also want to go
for activities that are less expensive now that you can see where your money is going.
And on top of saving money, you’ll be getting educated on some of the
topics you’ll be reading about. So, there really isn’t much to lose by doing this.
2. Make a budget.
I never understood why most people didn’t have a budget until recently. You see,
most people are worried about all the paperwork to be done to complete a budget. Well, in truth,
it’s a lot of work, but it most certainly is worth it. You see, you should look at
budgeting from a different angle. Look at the positives and look at how much is it going to
benefit you. And once you’ve got a rhythm going, make sure you stick to it. I’ve
found this to be the only way that works. So make sure you don’t lose the momentum.
If you create a budget and then store it away in a file or folder on your bookshelf
or filing cabinet, it’s simply worthless. So make you’re constantly updating and review it,
you can also use digital apps and software to make this task a lot easier. There are
a bunch of really good free ones online, which you can find with a quick search.
And if you are interested, I created a free savings and budgeting guide which
you can get with the link in the descriptions.
3. Give yourself a limit on unbudgeted spending. Buying something in the spur of the moment that
you hadn't budgeted for, can be enjoyable and emotionally satisfying – literately
everyone knows that. However, that emotional high may pass quickly,
leaving you with impulsive purchases you don't actually need - or want.
If this is you, then then the bitter pill to swallow is that,
this has to stop! In fact, it’s the entire opposite of good money habits.
Next time you are in the mall, try using the 1% rule for spending money. This rule states that,
you have to wait a day before buying anything that
costs more than 1% of your yearly gross income, so if you make $60,000 a year,
the rules states that you need to a day before making a purchase of over $600.
This guideline applies to discretionary spending on items you desire but don’t require,
basically, the inner battle in your mind of “do I really need this” vs “do I want this”.
The 24-hour cooling-off period gives you time to reconsider your purchase. Why not take an
additional day to consider if you actually need it? After 24hrs you might not anymore. So next
time you go shopping remember what that guy from practical wisdom told you to try.
4. Save for big purchases.
Seeing a beautiful $4,000 advertisement of a stunning 90-Inch flatscreen,
8K Television – I mean, Imagine the things you can see on that TV… Dose
not mean that you should immediately pick up your phone and credit card and start dialling
the number on the screen. That’s a really bad idea. Remember the rule that rule the
guy from Practical wisdom told you about, the 24hr one? Remember that?
So, experts suggest that if you really want that big TV then it’s best that the money comes
from your savings account which is dedicated for such purchases. Not a credit card loan,
unless you have a really good plan to pay the money back, which 99% of people don’t.
Also, there are countless advantages that come with saving for a big or expensive
purchase. You may be able to negotiate a cheaper price, or at the very least,
better financing conditions, if you save up and pay cash. The price could drop as well.
Additionally, for a larger purchase, getting a loan may make more sense,
especially if it's an item with appreciating value, like a home,
or if it prevents you from taking money out of your savings or investment account.
As paying in cash for the big expensive TV might leave you with little to spend,
therefore it’s wise to save up for a while before you buy the products you need or
desire. Therefore, it’s sensible to start saving for that specific thing so that your
daily life is not disrupted. 5. Read books about finance
It’s true when they say that if you want to hide something,
just put it on paper. The sad truth is that - most people never bother to read. You see,
some of the things people choose to ignore, such as the information contained in books,
has a good chance of making them successful if they bother to read them.
Learning is a continuous process, and the more you do it, the sharper your skills become. The
ability to make wise financial decisions is the chief advantage of financial literacy. It
gives us the information and abilities we need to properly manage our finances, including budgeting,
saving, borrowing, and investing. As a result, we are better positioned to meet our financial
objectives and establish financial stability. It’s kinda like a super power, and it really
puts you in a comfortable situation knowing that you are in control of your financial destiny.
6. Lower your monthly bill.
Cutting your monthly spending is one of the simplest ways to gain control of your money.
While you might not be able to cut back on certain permanent costs, like rent or vehicle
payments without making significant lifestyle changes, you can cut back on variable costs,
like clothes or entertainment by being adaptable and thinking sparingly. To begin saving on
things like your energy bills, you may, for instance, use less power, pick a different
life or home insurance company, or shop for your groceries at bulk discounts. Additionally,
you shouldn't accept a loan just because your salary and credit make you eligible for one.
Many people believe that the bank will not give them a credit card or a loan
that they cannot afford. But the bank is only aware of the income you have disclosed,
and the debts shown on your credit report; the bank is unaware of any other commitments
that would make it difficult for you to make timely payments. Based on your income and other
monthly responsibilities, you must therefore determine if a monthly payment works for you.
7. Eat at home.
Meals prepared and consumed at home may be quite cost-effective. All you have to do is reduce your
reliance on takeout. The odd indulgence at a fancy restaurant is OK, but starting to cook at home
or carrying packed lunches to work rather than dining out every day might save you money. Making
a weekly food plan may make it simple. Plan your meals for the coming week and then stick to them.
Even for those who don't consider themselves to be cooks, the internet provides a seemingly limitless
array of culinary and recipe advice. Begin by making at least one meal a week at home. Bring
your lunches to work starting next week. You might be amazed by how much money you can actually save!
8. Pay off your debt.
Carrying a lot of debt, especially on high-interest credit cards, is one of
the costliest mistakes you can make. If you want to improve your financial situation and open up
new financial opportunities, pay off your debt as soon as possible. If you’re the forgetful type,
you should list off all your existing debts, including credit card debt, student loan debt,
and vehicle loans, and determine the minimum payments you must make to stay on top of each
of them. Making minimum payments will not get you out of debt quickly, so consider your fixed costs
and how much of your discretionary spending budget you can set aside for debt repayment.
Additionally, you can try to lower the interest rate on the debt by requesting a lower rate from
the issuer, merging several loans into one, or moving high-interest debt to a low-interest
credit card, such as a balance-transfer card, to lower the overall interest rate. Afterward,
create a debt repayment strategy and develop responsible spending practices to pay off the
debt as rapidly as possible. Your monthly budget will be larger the faster you pay
off your debt. As I previously said, paying off credit card debt must be a top priority.
Unlike your automobile or house payment, it increases with time and is hard to cut back on.
9. Stop using credit cards.
Credit cards are a great and handy tool to have,
they are a life saver when needed and they do a great job getting that credit score up. However,
for some people there lack of self-control and an easy and available remedy to their
problems in the form of a credit card means that they quick dig themselves into disaster.
You could be depending too much on your credit cards if you are having trouble
making ends meet each month. If you continue using your credit cards as a crutch to get by,
you'll soon find yourself in debt. Your ability to pay your expenses, save for retirement,
or pursue other financial objectives will be constrained as a result of this.
So stop using your credit cards if you genuinely want to take charge of your money. To prevent
accumulating more debt, in addition to creating a budget so that you don't have to use credit,
try switching to cash or debit cards; opening a short-term savings account and
using funds from it for major purchases; or leaving your credit card at home.
Credit cards have high-interest rates that may quickly accumulate debt if not used wisely,
and can cause significant stress in the event of an emergency.
Because they feel like their money disappears too quickly each month,
many people develop the bad habit of depending on their credit cards. They are tapped out and rely
on their credit cards to get them through till payday after paying bills, food, rent or mortgage,
and other expenses. Instead of relying only on your credit cards to cover expenses,
stop using them altogether. Until you develop the wisdom and maturity to handle such an instrument.
10. Continue to spend quickly.
A "spending fast" can be just what your personal finances need if you suffer from credit card debt,
difficulties paying payments on time or other financial problems. Basically,
going on a “spending fast” simply means that you’re refraining from
making any discretionary purchases for a predetermined length of time.
This is another great way to help you reduce your spending and get your finances in order.
It may sound a bit daunting, but it doesn’t necessarily have to be. You may be familiar
with the well-known (and sometimes contentious) "detox" or "cleansing" fasts for your body,
such as giving up sugar or gluten for 30 days or even surviving solely on fruit or vegetable
juices for a few weeks. But did you know that in order to achieve financial wellness,
you may use comparable fasting or cleansing procedures to your spending and saving behaviours?
These are frequently month-long periods during which spending is restricted and
only categories like food, transportation, and recurring expenditures are exempted. If you're
ready to live simply for a while, commit to this challenge to boost your bank account,
alter your behaviour, and determine what you need rather than just what you desire.
Your perspective on money can even change as a result of the event.
It’s my hope that this has been helpful to you. Now you can always be one step
ahead of your finances by just following the steps from this video. Consider the
possibility that you have never had a financial problem. That simply means
more money for you. If you have any questions, don’t hesitate to leave a comment down below.
With that said, thank you all so much for watching,
have a great day, and I’ll see you in the next one.