During tough economic times, learning to manage your finances responsibly can save you from big trouble. While it cannot happen overnight, especially if you are used to a specific lifestyle, practice makes perfect, so giving it a shot is worth it. Some basic tips will help you towards the right direction.
How to manage your finances responsibly
1. Set a budget and stick to it
You cannot keep paying for things as they come. Setting a budget on a weekly basis is necessary. Decide on a minimum and a maximum spending limit for your weekly purchases and stick to it. If you overspend at some point, make up for it by spending less on your next purchase.
2. Keep the change
Get into the habit of keeping the change in a money jar on a daily basis. It may seem little to you, but over time you will be impressed by the amount of money that will be accumulated. Ask from your family members to do the same as well. Make a conscious decision not to withdraw that amount after a certain time has passed. That time may vary from family to family. For others it may be 3 months, for others 6 months and for others a year.
3. Use cash
With cash, it is easy to keep track of your spending. At any given moment you will know how much you spent, where you spent it and how much you are left with. You will know how much you can afford to pay for a new purchase as well as when you won’t be able to buy anything because you do not have enough money. On the contrary, with credit cards you cannot control your spending, as only the minimum payment is required of you each month. If you do not want to cut all ties with plastic money, then at least pick only one credit card to use, preferably a prepaid one where you will be able to set your own spending limit. Also, decide on the kind of purchases you will make with that credit card. This is important so as not to get tempted to use your credit card for every single purchase you make. Whenever you can pay with cash, it is best not to use your credit card.
4.Spend less than you earn
Another way to manage your finances responsibly is to learn to spend less than you earn. Always bargain to get a better price, even if you stumble across a good discount. When it comes to products that you regularly use, prefer buying in bulk. That way you will get a bigger quantity at a lower price and it will take you a long while to go to the supermarket. Whenever free is an option, make sure to grab it. Free e-books, free movie screenings, free entrance to events can help you spend less than you earn on a daily basis.
The above tips will hopefully help you manage your finances responsibly.