There is no question; the global economy has undergone a drastic transformation during recent years. And while financial markets ebb and flow continually, the world economy is just getting back on its feet – having faced one of the worst downturns in history. The devastating impacts of the mortgage meltdown and subsequent collapse within stalwart financial institutions were felt from Wall Street to The City, shaking the underpinnings of global finance. The unanticipated financial fall served as a wake-up call for many individuals placed in peril by the loss of savings, investment income and employment.
Large-scale financial irregularities send ripples across all sectors of the economy. For those living on the edge, straddling debt and solvency, even the slightest economic distress can be too much to bear. In the wake of global economic uncertainty, empowered citizens are paying close attention to their finances, seeking better ways to make ends meet. For many, getting back to basics is the best path forward, laying a strong foundation for the type of money management success discussed on the Readies.co.uk blog.
Pay Down Debt
Oppressive debt crushes your family’s financial health, limiting your options and constantly pressing you to keep pace with monetary obligations. If you are like many UK residents, loan repayment, credit card obligations and other debt eats up whatever money is available in your family budget each month. Ultimately, the repeating cycle perpetually prevents you from saving or being financial proactive. As a result, the first step toward successful money management and financial security is reducing the impact of debt on your family finances.
Debt has a way of compounding and spiraling beyond our control. In part, minimum payments are responsible for stringing repayment along, taking vary small bites out of the principle balance with each monthly payment. To gain ground and get ahead of debt, it is essential to accelerate repayment beyond your credit card company’s minimum required levels. And when debt reduction is the order of the day, limiting charges will also support rapid debt relief. Formal debt management plans are called for in some cases, whereby an intermediary agency is responsible for distributing your payments among creditors.
Account for Spending
It is hard to effectively manage money without knowing exactly where you stand financially. To gain insight into your family’s cash flow, it is essential to account for total household spending. Start by creating budget categories, making it as easy as possible to see where your money goes.
Discretionary and compulsory spending represent two broadly distinguished categories that account for the money you spend. Recurring obligations, like rent, insurance, mortgage payments and other regular installment debt constitutes the fixed portion of your monthly budget, which remains relatively consistent from month to month. Discretionary buys, on the other hand, are expenses added to the basic cost of living, including entertainment, fashion, recreation and other luxuries you decide to purchase. Although costs can be cut in both areas, discretionary spending is easier to trim than fixed costs, because money spent on optional buys can be curtailed without consequence.
Change Wasteful Habits
The key to sustained financial health is balancing income with expenses. And though it sounds straightforward, managing household expenses without coming up short is harder than it seems. In order to make the most of household budgets, cash-conscious residents turn their attention to wasteful spending and consumption.
Food and energy account for a significant share of household waste, furnishing money saving opportunities for those committed to conservation. By planning weekly menus and shopping to a grocery list, for example, conscientious families reduce the amount of wasted food within their homes. And by managing their thermostats correctly, homeowners trim energy costs during the heating season. Saving petrol through efficient motoring and trimming unneeded memberships and subscriptions adds to savings for families willing to take a close look at wasteful habits.
When trimming expenses is not enough to ease financial pressure at home, bringing-in additional income might be the only way to make ends meet. Whether through part-time employment or a home-based hobby business, generating supplemental income can make a big impact on your bottom line.
Temporary seasonal employment provides a short-term boost, which may be all that’s needed to right the ship. Side jobs in your own field, like online tax preparation or carpentry, also yield added income, without pushing you too far beyond your comfort zone. In a pinch, house-sitting or maintenance work may be available to round out your earnings.
As complicated as money management can become, getting back to basics provides a worthy path to financial security. By budgeting and accounting for household spending, committed consumers find ways to reduce debt and regain firm financial footing. Eliminating waste eases financial pressure too, and there is nothing like added income for maintaining affordability.