Are any of these your expression when you open your bank statement or try to work out your budget?
Perhaps you just had to go on that holiday that you could not really afford.
Or it could be that you absolutely had to have that little black dress and the expensive pair of shoes that goes so perfectly with it.
On the other hand, you might not be spending on luxury items, but are struggling with just day-to-day expenses. Prices are going up, but your salary is not.
What to do?
Whatever the reason for your financial problems, there are basic steps that can help to alleviate at least some of the pressure.
Let us start off with the most basic step.
Make a budget:
A budget is usually described as a financial planning tool, which makes it seem intimidating. Or it may bring to mind restrictions that will make your life miserable. But, put simply, it is a breakdown of your income and expenses.
You may be surprised to know that some people have no idea where their money goes each month. Or maybe you are one of those people.
It's important to be as accurate as possible. Fudging the numbers will not help you. Your bank statements can be a helpful tool to track your monthly expenses.
A good start is to split your expenses into Essential or Required Expenses and Non-essential or Discretionary Expenses. Always budget on the high side, rather than under-budgeting. Any surplus can go to other expenses or to Savings.
You can use a simple Excel spreadsheet or download any of the numerous apps available online.
Your budget may look like this:
Do not forget to put all debts or loans on the budget.
There is no need to be overly rigid about what essential expenses are, as they may change occasionally. For example, at the beginning of the school year, clothes may become an essential expense because your child needs a new school uniform and shoes.
Or there may be annual expenses, such as subscriptions, vehicle licence renewal, vehicle maintenance or medical check-ups.
Utility expenses might also change from month to month.
If you have not been using a budget, it might be difficult to stick to it the first few months, but do not give up. Buy or pay for all the essential expenses first. It requires self-control, but it can be done. Keep in mind that you will need to set aside time to enter the actual expenses, so you have a clearer picture of how accurate your budget figures are. You can use the actual figures to make a budget for the next month, while accounting for possible price increases.
If your budget does not allow for much in the non-essential expenses category, you can set aside a little amount each month to splurge on yourself and your family on a special occasion.
At times, though, working out a budget and sticking to it does not help much, because your expenses are still too high.
What then?
Look out for Part 2: Adjusting Your Lifestyle.
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