If you are like most people, you tend to spend way too much money on things that you just don’t need. So what happens next? After you spend too much money, you might not have enough money to make ends meet. So what do you do? You then have to take out a loan in order to satisfy your basic living expenses. This is certainly not the best way to keep your financial house in order. We are going to show you a few very simple things that you can do to alleviate this problem and help you to keep your financial situation in order.
Basic finance is simple. You absolutely know two things. You know how much money you earn and you know how much your basic expenses are. Your earnings are your net wages. Remember that’s net wages – wages after taxes, etc. You have several basic expenses. Those are the bills that you have to pay every month. Those would be your rent (if you are renting your residence) or your mortgage (if you own your home), you utility bills (phone, gas, electric, water, sewer, cable, satellite, internet access, etc.), your insurance bills (life, auto, home, etc.), and of course, food. Food is probably the biggest variable, so for illustration purposes, let’s leave that out for a moment.
If you net wages are (for example) $3000 per month and your expenses total $2300 per month, you have $700 left over. That money needs to be spent on food and anything else. If you spend more than you bring in, you might need to look into short-term loans. Those are very high interest loans that should be avoided if at all possible.
You probably can’t increase your wages, but you can probably decrease some of your expenses. The more you decrease the $2300 in expenses, the more excess cash that you have. So here are a few simple ways to increase the $700 worth of disposable income:
- Firstly, you could increase your deductible on your insurance. By doing this, you will have more cash now, but be aware that if you ever need the insurance, you will have more out-of-pocket expenses to start off with.
- Adjust the heat and air conditioning. People tend to make these numbers too comfortable. In the winter, keep the thermostat and 64 and put on a few extra layers. In the summer, keep the thermostat at 78 and take off a few extra layers. You will be surprised how much money this can save.
- Take shorter showers. The cost to heat the water, and the cost of the water itself can be considerable.
- Cancel those premium channels or perhaps cancel cable / satellite all together.
- If you are renting a fancy apartment, consider moving to a more modest unit. You might be able to save several hundred dollars each month.
These are just a few examples of money saving ideas that you can do to help you stay above water, financially.
Remember, it sounds basic, but it is very important to spend less than you make. Make sure you know how much disposable income you have and make sure than you never, ever exceed that amount. Otherwise, you might end up having to look for one of those online signature loans for bad credit risks. You definitely want to avoid that, if you can.