Most consumers find themselves in debt because they often make the mistake of using credit cards in place of cash. They fail to take the steps necessary to ensure their cash is always flowing within a reasonable budget instead of using a credit card as an extension of their income. This leads to balances they can not pay off at the end of the month and imminent debt problems. Face it ““ it seems much easier to charge it than it does to work through a monthly budget; however, the consequences of not doing so can be big.
If you have a goal to stop charging so much and work toward managing the cash you have on hand in a better manner, here are some good tips to help you out and may save you money in fees and penalties when you rely on credit:
Budgeting
We have touched on the importance of a budget and if you want to always remain in control of your cash, you need to have a budgeting system in place. There is no one-size-fits-all solution for creating a budget. While there is software and other methods for calculating a budget, the old-fashioned pen and paper method make work just as well and be less expensive. However you plan a budget, just keep doing it each month until it becomes a natural part of your life. Work with it each month and see where you can make expense cuts to free up more cash.
Start An Emergency Fund
Even if you have only $20 a month to put towards an emergency fund, start doing so now. Automate that deposit into a savings account and don’t touch it unless the situation warrants a real emergency. Keeping adding to the stash so that when an emergency, such as a large house or car repair bill comes in the mail, you don’t have to charge it.
Differentiate Wants and Needs
Who hasn’t fallen victim to an occasional impulse buy? Most stores are designed to make you fall for those spontaneous purchases so it is not all your fault. However, if you really want to have a better cash flow, you need to really start training yourself for being able to walk into a store and differentiate between the items you really need and those you just want to have. Psychologically, there are many ways to retrain your brain to keep your spending down. One example is to commit to a seven-day waiting period for all purchases over a certain amount or promise to pay cash only for all purchases on your want list.
Analyze Your Shopping Habits
Did you ever take the time to really look at receipts of your purchases? If you are not looking for the best deals for your money each time you are out shopping, you can be spending unnecessary money. Use coupons. Wait for sales. Comparison shop. Buy store brands. And one of the most important rules, never leave home without a shopping list and a commitment to buying only what is on the list.
Make Saving Money a Lifestyle
It may not be easy to change how you live your life but it is certainly not impossible. Start finding a new way each week that will incorporate saving money into your daily life. Frugality is a popular topic these days and there is no shame in being frugal. Learn tips from family and friends who are also working to expand their cash flow. Working with a buddy may also increase the support you feel in your new financial choices. Bookmark websites that you feel provide fresh, valuable tips. Do a little at a time so that the overall change doesn’t wreak havoc on your current life.
Guest post by Tisha Tolar, who is a writer for DebtFreeDestiny.com, where she provides information about credit card consolidation, debt relief and how to get out of debt.
