Can't remember if you paid your rent or utility bill on time? If so, then it means your money controls you. However, when you have a reasonable personal budget that guides you to keeping bills paid on time and reducing debts, you control your money.
Letting money control you can make your life stressful and unpredictable. But you don't have to be rich to control your finance. Devoting 15-20 minutes a week to ensuring that your finances are in order can bring you back in charge of your money, and life.
Review your spending habits
The best way to prepare your budget is to consider what your family requires and what they simply want, on a daily and monthly basis. Four general categories should be considered:
- Regular essential expenses – rent, food, utilities, mortgage, etc.
- Long-term savings – RRSP, RESP, or debt reduction, etc.
- Emergency fund – cover 6 months necessities.
- Recreational spending – entertainment, trip, date night, etc.
There are many ways to structure your budget, but a simple solution is the 60/20/10/10 rule. The percentages may vary slightly per individual or family, but it ais a solid guideline to stick within.
Simplify your credit card situation
Multiple credit cards can create headaches. Simplify by just having one card, this can help you monitor your bill in a more organized way. Remember, you need to keep track of the payment deadline as credit cards charge very high interest.
Automatic payments & savings
Paying your bills online as much as possible can save you lots of transaction time. Nowadays, most bills can be paid online, such as, utilities, rent or mortgage, Internet, etc. As well, make your savings deposits automatic to guarantee your long-term financial goals.
Building better borrowing terms for the future
Maintain your billing accounts with on-time payments, this raises your credit score. A good credit score can save you a significant amount of cash when you choose to buy a home, as financial institutions tend to provide better lending terms for those with strong credit scores. A slightly lower interest rate over a 30-year mortgage amounts to significant savings.
Shop around and save
During a recession, every dollar counts! Shopping around for better products, loans and insurance can make a difference to your day-to-day life.
In both short-term and long-term, efforts to stay within the budget can improve your spending habits. A good budget will shift expenses from unnecessary categories into the most essential household categories allowing you to achieve your own financial freedom.
Do you have any tips to share here?