As much as we wish that money was not important, it is hard to deny that finances are extremely important in our life. If not used efficiently, lack of financial resources can put you in a bad spot. But of course, mistakes are made at times, but they are always corrigible. Let us see how simple lifestyle changes can put your finances back on track
1. Analyze reasons for going off track:
Without learning what landed you in the problem, it is difficult to get solutions for the same. For Ex: If you are under the burden of too many loans, analyze
Why did you have to go in for that many loans.?
Did you put them to use for the intended purposes?
Could the purchases have been postponed?
Once you answer questions like these, you would have a rough idea about the kind of slip-ups that you have.
2. Draw up a budget:
To undo all the wrong that you have done, it is good, to begin with, a budgeting exercise. Start keeping an account of your spending on credit cards and in cash and see if it is going beyond your income. Start planning if you have a big spend in near future like buying a vehicle or a house. You could then accordingly start saving up for paying the down payment.
3. Rethink usage of credit:
While it is good to know that credit is available when you need, it takes much more to put it to the right use. We are being constantly bombarded with advertisements for easy loans and credit cards. Before you apply for any of these, it is good to give it a thorough thought. Go for credit when it necessary. When you apply for credit, do pay attention to the terms and conditions and the most importantly the rate of interest payable.
4. Make a plan to repay high-interest debt:
When you are in debt, paying interest is a big burden. Especially when you have loans that bear a high rate of interest like credit cards. It is good to draw up a plan on how you could pay back your debt at the earliest. Never roll over credit card debt, and if you must do so, do not spend more on that card. Because all future purchases will also be charged interest.
5. Rework your insurance and savings:
Finances are not only being about having debt under control. It also means savings for your goals and being insured. Draw up financial goals like buying of fixed assets, retirement, starting up a business etc with the proper time. Then look at how much you need to save each month/year to meet those goals. Do not underestimate the need for insurance.
6. Do not shy away from help, if required:
Whether you are looking for help in managing your finances or debt, help is just around the corner. It is good to approach experts in the matter like financial planners or credit improvement specialists like us who can help.
Additional Reading: Got Your First Salary? Time to plan your financials better