© Gerd Altmann

Take Charge of Your Finances in 5 Easy Steps

If you want to take control of your finances, and you should, then we have 5 easy steps for you to do this. These are all proven ways to help you to get control of your money. It will take some effort and persistence on your part to make these work but it will be worth it in the long run.

1. Pay With Cash Instead of Cards

When was the list time that you went to the shops and paid for your purchases with cash? Probably a long time ago right? These days people tend to carry only small amounts of cash around with them and rely too much on their credit cards.

It is far too easy to make impulse purchases that you had not planned when you have your credit cards available. The problem with this is that those impulse purchases have a nasty habit of turning into long-term debt.

Identify what you need to purchase and then take that exact amount in cash with you to the shops. If you see something that you have not planned to buy then you know that you don’t have enough cash for it. Try this for a week at first and then gradually extend this.

2. Know How Much You Are Spending

One of the biggest problems with using credit cards to pay for everything is that it is very easy to lose track of how much you are spending. The arrival of your credit card bill may not alert you to this either. It is very easy for spending to mount up when you use credit cards because you are not really paying attention to what you spend.

The best way to keep track of what you are spending is to use cash as we suggested in the first step. Alternatively, you could take a notepad shopping with you and write down the amount of each item that you purchase. It is a lot harder to part with cash and reviewing your notes when you return home will tell you exactly how much you have spent.

3. Monitor Your Expenses

In the last step we recommended that you use a notebook to record all of your purchases when you go to the shops. We want you to take this a step further and start to monitor all of your bills and expenses. When you buy a coffee on the way to work, record it. You can continue to use your notepad or download an app for your phone that will enable you to record everything.

At the end of each week, review your outgoing column for the past seven days. What did you purchase that you didn’t really need?

4. Create a Budget and Stick to It

By this stage you are well on your way to taking charge of your finances. Now it is time for you to create a budget for your household. You can use a simple spreadsheet to do this or pen and paper if you prefer. There are apps available for this too.

Record everything that the whole family is spending in your budget. Compare this to your household income and see what is left. Examine all of the expenditure and if anything was unnecessary then cut it out.

5. Pay off Your Debt

After creating your household budget and cutting out unnecessary expenditure you should have some spare cash to play with. Use 30% of this money and put it into a Credit Union account to start building up your emergency fund.

Next you need to start paying down your credit card debt. There are a few ways that you can approach this:

  • Pay off the debt on the credit card that has the highest rate of interest first
  • Pay off the credit card with the lowest balance so you receive one less bill a month
  • Talk to the credit card companies and request a lower rate of interest

Just start paying off your debt.

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