For some people, managing their money seems to come naturally. They know how and when to use it and they spend it wisely. However, for many people, managing their money is a difficult task. As a result, they end up always just one paycheck away from poverty.
Money and Stress
Without money to pay your bills and cover the cost of you daily essentials, you’ll end up stressing out each day. Over time, this can have a negative impact on your health. You may also turn to drugs or alcohol as a way of coping with the shape of your finances. This will only further complicate your life and possibly cause an addiction. The good news is that, if you do find that your use of alcohol or drugs has become problematic, there are places to go for help such as a center for detox and both in- and out-patient rehabilitation centers.
Facing the Problem
In order to return to a normal life, you’ll need to face your money problems head-on. A good approach is to make a comprehensive list of all of your outstanding debt. This will give you a clear accounting of what you owe and to whom. Then, subtract the total from the net amount of money that you take home each month. Hopefully when you do this, you’ll have money left over. If not, you may need to borrow money from a family member or friend or consider looking for a part-time job.
Respecting Your Money
A large percentage of the population that lives paycheck to paycheck has no respect for money. They receive their paycheck and immediately start spending it on luxurious items or frivolous purchases that consume a lot of money over the course of a month. Instead, before spending a single cent, think of how hard you work to earn it. Living within your means is a path to financial freedom.
The Road to a Sound Financial Future
Money is something you need in order to enjoy a comfortable life. However, if you constantly throw it away, you’ll never have anything saved for an emergency. You should have at least three to five months’ worth of money to cover all of your bills set aside in a savings account. This is important because, in the event that you or your spouse lose their job or suddenly become sick, you’ll be able to keep paying your bills on time. In order to get ahead, you must put a portion of each paycheck away.
Living on Cash
With direct deposits being a way of life, many people lose sight of how much they spend. A swipe here and a swipe there for small purchases may seem innocent. However, when you add them up over the course of even just one month they can reveal an alarming figure of hundreds of dollars. A way to get real and pay attention to your spending is to switch to a cash-only system. Pay yourself a weekly allowance and then live on it. Reserve the checking account for your bills and necessities. You’ll find that, when you buy that hot latte for $4.25 each day, your allowance will quickly run out.
Save for the Big Ticket Items
A good way to learn how to manage money is to practice saving it for large purchases. For example, let’s say you need a new sofa. Instead of buying it on credit, you save the money and pay for it with cash. You’ll own the sofa free and clear and you won’t pay anything extra, like interest. Once you get in the habit of buying with cash, you’ll think long and hard about each item and whether or not you really need it.
Reducing Your Debt
It’s very easy to accumulate excessive amounts of debt. However, it takes a long time to pay that debt off. Paying with cash is a great start towards reducing your debt.
Follow up with paying a little extra on your bills each month and you’ll see the balances go down quickly.
Many people don’t know how to manage their money. Thankfully, there are several things you can do to improve your handling and enjoy a prosperous life. Start with the hints we’ve shared here!