Having a clear picture of your financial health is as important as knowing your physical health. Take some simple steps to help you make effective decisions and keep your financial goals on track.
List all of your expenses
Tackling your financial situation begins with a full accounting of every item you spend money on, regardless of how small the expense may be. Look up your utility bills and note whether electricity is higher during cooler or warmer months when running the heat or air conditioner more often. If you stop for a morning cup of coffee before work, include that, as well.
When tracking monetary outflow it helps to have all of your bank and credit card information at hand. Go through a full calendar year and note any unexpected purchases or transactions. It is easy to forget annual fees that are automatically billed to bank or credit cards – write those down, too. Once you have conducted a full accounting of your expenses, add the amounts up monthly and annually. The number will likely surprise you.
Make a budget
Once you know where all of your money goes each month, you can add in any income you may earn or receive. Now you are ready to make a budget. Setting up a monthly schedule with additions of any payments that come out annually or weekly is usually the easiest way to approach your budget.
Begin by taking all of the expenditure information, breaking it down into sections for utilities, transportation, food, etc. Anything that is not vital, such as entertainment, should be listed separately. For example, list “Groceries” separate from “Dining Out” if the latter category serves as a form of entertainment. Continue the process until you have a visual of when money goes out of your account and when it comes in.
Pay Loans on time
If you have needed extra money in the past and sought temporary financial security from an agency such as Buddy Loans, it is vital to your credit score that you pay your loan on schedule.
When you take a loan out, the terms are listed on the document you sign. Sometimes the language is not clear or easy to understand. If that is the case, consider finding another lender. If you are currently at your best option, ensure you read the terms very carefully or have a translator or trusted person assist you to better understand the content.
Now that you have a clear idea of the terms set out before you regarding the payment schedule, amount, and any penalties that may accrue, ensure you make at least the minimum payment at every stated interval. Failing to do so will reduce and potentially damage your credit rating, thus making it difficult to secure a loan in the future. If you are able, always pay more than the minimum payment each month to reduce the length of time you will be paying off the loan in addition to the calculated interest.
Part of budgeting is planning. Is there a trip you have been hoping to go on? A destination to visit? A new vehicle to purchase? The list goes on – and there is always a list. There is nothing wrong with spending money, as long as you have enough to spend. Take stock of your budget, make your payments on time, and enjoy what you have earned.
