Do you always run out of money before your next pay cheque? You might be the victim of poor money management.
Perhaps you might be cutting the wrong things out of your budget and focusing on wants instead of needs. This short-term thinking might leave you high and dry in the end. Here are several things you should always include in your budget.
#1. Money for Savings – Whether you are saving for retirement or putting money away from an emergency fund, you need to include savings in your budget. Even if you feel like money is tight, you should at least put something in savings. Start by saving just one percent of your income, just so you start somewhere. Next pay period, increase it to two percent. After that, increase it to three percent. And keep going until you reach 20 percent. Yes, it’s possible.
#2. Debt Repayments – Leaving debt payments out of your budget is ill-advised. The debt won’t go away and the problems it causes only grow worse. Always make at least the minimum payments on any debts you owe every month, and ideally pay more, so that you can get rid of your debt faster. (It’s okay to use your savings to repay your debt.)
#3. Healthy Foods – It’s tempting to try to save money by forgoing buying expensive foods at the grocery store and opting for Ramen noodles, but this is a poor strategy in the long term. You can cut back on expensive items, like meat or seafood, but don’t lose out on the fruits and vegetables. Poor diets affect your health, and leads to serious issues.
#4. Basic Hygiene – Opting to switch from the £7 a bottle shampoo to one that only costs £2 makes good financial sense. Opting to forgo showering in order to save money does not. Not taking care of basic necessities, like toothpaste, can lead to dental problems when in turn seriously impact your finances. If necessary, opt for the bargain brands when it comes to hygiene, but don’t stop purchasing these items entirely.
#5. Home or Renter’s Insurance – It’s tempting when on a tight budget to re-examine insurance policies when looking for ways to save money. While you can perhaps reduces the size of your payments by adjusting your insurance policy, don’t forgo the policy altogether. Both home and renter’s insurance, especially renters, is very affordable yet still covers your stuff if it gets stolen. Letting it go is an unnecessary risk.
#6. Tiny Treats – Don’t cut all the fun out of your life either. Even if you are only able to save a small portion of your income to spend on yourself, do it. Having a budget that’s too strict means you’re less likely to stick to it over time. Leave yourself a bit of wiggle room when it comes to going out with friends or family so that you can enjoy yourself while you save money.
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