Are you amongst the thousands of people who find themselves counting down the days until their next payday? We’ve all found ourselves doing it however it’s rare that we actually think about why we are left in this situation. When searching for excuses we often blame the recession and the rising cost of living.
But is this a valid reason? After all, the recession has been going on for a number of years so shouldn’t we have learnt to deal with it by now? Don’t get us wrong, the recession has certainly made a difference to our finances however there is usually an underlying reason as to why we find ourselves struggling to make ends meet.More often than not financial problems arise as a result of overspending or ill financial discipline. Throughout this article we are going to discuss how you can improve your financial discipline and subsequently ease your financial pressure.
Identify Areas of OverspendingThe first step should always be to identify your problem areas. The best way of doing this is by budgeting; splitting your outgoings into categories allows you to see exactly where all your money goes and highlights areas where you are spending more than you should be. Often it is not your essential outgoings that are the problem but your non-essential expenses such as days out, nights out and Birthday gifts.
Recreate Your BudgetHaving evaluated your outgoings and identified area of overspending your next job is to reduce your level of outgoings and recreate your budget. By dropping your level of outgoings you’ll be able to see just what effect this has on your disposable income. Simply by saving a few pounds here and there you could find yourself significantly better off when the end of the month comes.
Create a Spending DiaryEven having implemented a budget many still stray off track due to simply not thinking before they spend. The odd coffee here and the odd sandwich there may seem insignificant but if you were to write them all down you’d be surprised just how much you are spending. This is what a spending diary is for; split your page into three columns one as descriptive column where you list everything you spend, one as a costs column listing how much you spend and finally a feelings column where you write down how you felt after spending money.
Know What You’re Up Against
One of the major reasons why people find it hard to climb out of a financial hole (or avoid ending up in one) is because they simply don’t take the time to understand what they’re up against. Financial discipline is all about knowing every aspect of your situation and dealing with things methodically. If you owe a variety of different lenders, for example, you’ll want to set priorities and determine how much to pay who and how often. Those who find themselves or a loved one in legal trouble may want to learn the definition of bail and determine what they might be in store for cost-wise.Knowledge is important, and you need to honestly evaluate where you stand before you proceed.
Use Budgeting SoftwareTechnology has made handling one’s finances quite a bit easier and more streamlined than ever in the past. Budgeting software is not only inexpensive (there are many programs available free of charge), but it can have an immense impact on how well you’re able to stay disciplined about handling your finances. Because this software often requires you to manually enter transactions, you’ll be forced to pay close attention to exactly what you’re spending your money on. You can categorize your purchases and set limits, which is a great way to ensure that you don’t go overboard at any point throughout a given month. For those who have problems managing their money, there is really no better solution than a solid piece of budgeting software.
Don’t Neglect Your SavingsIt’s difficult enough these days for many people to even pay their bills, let alone build upon a savings account. The importance of having a savings cannot be refuted, though, and those who are aiming to improve their financial discipline should start by setting up a proper savings account and contributing to it regularly. Every dollar you bring in has a job, and while some of your money should be delegated to bills and household expenses, the rest should not be used for leisure – it should be saved.
If you’re disciplined in how regularly and often you contribute to your savings account, you’ll be able to rest easy knowing that you have a financial padding in the scenario that you might actually have to use it. Once you have a savings under your belt, you’re already doing better than many Americans in regards to financial discipline.