Money Management Basics: Balancing Your Budget, Savings, Spending and Bills

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payday loanSome people just seem to be good with money and make the rest of us look like novices but don’t feel too bad if you are not amongst that elite number, as the majority of us could do with some extra money management skills.

Here is a look at some of the basics, which will provide a solid foundation to help you become savvier and confident with your money.

There is an overview of the importance of budgeting, how to keep on top of your monthly bills, why clearing your credit debt is a no brainer, and how to change your attitude toward saving.

You can’t expect to get far without setting a budget

You only have to mention the word budget when talking about personal finances and you can almost see many people glaze over with a disinterested look, but boring as it might be, setting a budget is at the very heart of good financial management.

You just have to accept that sometimes the most useful advice is not exactly going to get the pulse racing. The main thing is that you need to sit down and work out exactly how money you have coming in each month and exactly how much money is going out, and where it is being spent.

Once you see your finances laid out in front of you will then have the opportunity to see where savings can be made and start developing a strategy for managing your money more closely in the future.

Keeping your bills under control

Another important tip to follow is to remember to regularly review your monthly payments to see if there are any better deals available elsewhere.

If you have older kids and need to insure your teenager for their car, you will know that this is a cost that can easily blow a hole in your monthly budget unless you manage to find a good quote.

Once you have secured a decent deal don’t automatically accept the renewal invitation without checking whether you can find it cheaper elsewhere. The same rule applies to your deals for broadband, gas, electric and mobile phones.

Always be on the lookout for a better price so you can save as much money as possible to help your budget.

Prioritize your debts

It feels good to have some money set aside in savings but what so many people don’t realise is that a better long-term strategy would be to prioritize clearing your most expensive debts over having some money in a savings account earning very little interest.

With average instant-access savings account rates well below 1% and credit card interest rate charges heading north of 12% for most consumers, it would be smarter to pay off this expensive borrowing and be able to keep more of your money to yourself in future, which could then be invested.

Little and often

It is also worth saying that you sometimes need to change your mindset to become successful at saving regularly.

Many of us are dissuaded from saving because we can’t commit to putting away a reasonable amount of money each month. Even small amounts set aside regularly can add up to a tidy sum over time, so starting to save with even modest amounts is better than doing nothing.

If you get to grips with the money management basics everything else should start to fall into place.

Isobel Carter writes about money matters for a selection of personal finance related blogs. She works in the banking sector and is a Mother of two daughters.

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