Sometimes that final week before your salary arrives can be a real financial struggle. If you are spending more than you are earning, it can be very tempting to turn to credit cards, overdrafts and even payday loans to see you through.
They might help in the short term, but in the long term you are just building up debts you will have to deal with later. And you still have not tackled the real problem. Here are steps to help you take control of your finances and help you survive until payday comes around again.
It is really just a simple task of putting a figure on the money coming in every month and the money going out. You will need to include all your household bills, outlay for your mortgage/rent and debt repayments as well as your day-to-day spending. You can do this on a piece of paper or in an Excel spreadsheet. And if your `leisure’ spend far exceeds your `household’ spend, then you know you may have a problem!
The best way to keep an eye on things is to note down all your purchases – however small – in a spending diary. It sounds like a hassle, but by recording everything you spend, you will always know exactly how much cash you have left and you will know where all your money is going. Be prepared for some not altogether pleasant surprises! You will probably find it’s those little treats here and there which really add up.
Of course, what you hope is that the first figure (money in) is much larger than the second figure (money out), but if that is not happening, you need to start thinking about making some budget cutbacks. If you find you have a tendency to fritter on certain items, try to cut them out or, at least, replace them with cheaper alternatives. For example, if a lot of your money goes towards socialising, try inviting friends over for dinner more regularly instead of going out to expensive restaurants.
Once you know how much cash you have left over after you have paid your essential bills, set yourself a budget for the week. And ‘pay’ yourself that budget in cash once a week. Using your debit card to pay for things is misleading as it is easy to lose track of what you are spending. If you have hard cash in your hands it is much easier to see when it is running out. And once you have that set amount of money out for the week try really hard to not go the cashpoint again.
And do not forget about the little things too. There are literally thousands of ways you can make savings. Walking or cycling to work, cancelling an unused gym membership and taking homemade lunches to work.
Budget cutbacks will only get you so far. Your next step is to give your finances a good overhaul. These ideas make sense even if you still have plenty of money left at the end of the month:
The sooner you pay off your debts, the sooner you will enjoy a big boost to your finances. And the quicker that day arrives, the better.
You might find once your finances have a clean bill of health, you actually have some spare cash.
