Eight Suggestions To Help You Regain Control Of Your Expenses – Part 1
If you have ever started checking your bank account nervously and have doubts about your account balance before payday, then you should start considering making some changes in your lifestyle. However, before taking some rush decisions like stop going eating out or cutting up your credit card, here are eight suggestions you should ask yourself that will help get you get a better ideal -and regain control- of your finances so you don’t have to take on a personal loan.
Know Where Your Money is Going
One of the biggest financial mistakes that a lot of people make is that their only control about their finances they have is to take a quick look at their credit card statement each month, when what they should do is to track how their money is being spent. Not doing this can cause several of your day-to-day expenses to skyrocket without you even knowing, like your groceries or a sudden increase on your electricity bill for example.
One of the best ways to regain control of your finances and avoid personal loans is to take advantage of the great online personal-financial management tools available on the web that allow you to easily and automatically track every bit of your spending. Banks also carry these types of tools on their websites, so there is no reason not to start using them.
Focus On the Year, Not the Month
Another gave mistake that a lot of people make is to focus too much on budgeting by the month. The problem with this is that a ton of research suggests that most people tend to forget unexpected expenses and one-time expenses, as well as even personal loan payments when putting too much focus on the short term.
On the other hand, when people start budgeting considering the entire year ahead, they tend to take into account many of those costs that they forgot about before. Now here is a surprising number: A research by the University of Southern California showed that when college students budgeted by the month, they tended to be about 40 percent off-target in their budgets. Yet when these same students budgeted by the year, they only missed their target by just 3 percent.
Consider Your Daily Spending Habits
Take some time to think about the different things in which you spend money every day. A simple daily ride in a cab, a series of cafes or sandwiches at your workplace’s cafeteria and even that six pack of beer that you get every week. All of these small expenses add up day to day and could end up being of up to hundreds every month. This kind of small daily expenses that add up are called the “Latte Factor” by financial experts and sometimes are the reason why so many people end up applying for personal loans.
Evaluate Your Own Weaknesses
Just like you should consider your spending habits, you should also take some time to think about your own weakness. Everybody has one, so don’t even think for a second that you don’t. Perhaps you like golfing, or designer clothes, or nice dinners, or going on trips. If you recognize that there are some small guilty pleasures that you have that are costing you money, then start planning for ways to restrict -not eliminate completely, just restrict- them. You could, for example, bring along a good friend who reminds you not to spend that much and so forth.
There you go. These are the first four suggestions for you to improve your spending and avoid personal loans altogether. Check back our next entry for the following four, which will help you even more in staying in control of your finances while avoiding acquiring personal loans.