6 Steps You Can Take To Manage Your Money Better When You Have Debt
There is no need to be a financial guru to handle your money with confidence. If you are a little bit
unsure about how well you can manage your own money, your certainly are not alone. In fact, a
long-running study of over 17,000 Australians discovered that only 35% of people could answer
simple money management questions correctly.
The good news is that with a little planning, you can take back control of your finances. It’s time to
start working towards getting out of debt and reaching your goals. Here are the 6 steps you can take
to manage your money better
1. Get Clear on your Financial Goals
Managing your finances should be a positive experience, but you need to know where you’re going
and have a plan on how to get there. Just like popping out to the shops for your groceries without a
list or a plan for your weekly cook ups in mind, quite simply you shouldn’t start your financial
journey without clear goals.
Take action and start today by setting realistic goals. You might want to get rid of your debt and
build some savings. Perhaps you have something more specific in mind, like a house deposit, your
children’s education, or an overseas trip. Whatever your goals, write them down and begin tracking
your progress.
2. Lean in and face Your Debt Situation
Before getting to carried away, you need to understand precisely what you are dealing with. A good
place to start is by putting a list of all your debts together that would include; your mortgage, credit
cards, car loans, personal loans and so forth.
Now that you understand your overall position, it’s time to take a look the devil in the eye (details)
and identify where the hell all your money goes - This bit can be painful doing it the old-fashioned
way but using some technology can make this step really easy. Give our Wealth Portal a go or find a
suitable money tracking app. Leaning in and eyeballing your spending head-on can be a bit
frightening or intimidating, but it’s also a huge step forward and a hurdle you must overcome.
3. Identifying, Being Accountable and Admitting the Problem
This is the time where we need to be really honest with ourselves! Perhaps you are prone to
impulsive spending, or maybe a number of small expenses are starting to add up. You have over
indulged or went for the upgrades when really the base models would have been just fine. Perhaps
the “just this once” purchase which turns out to be every other month, whereby you have prioritised
a want over a need and at the end of the day this went on the credit card and the compounding
interest bill is draining your cash. It’s important to go through this process and identify the
behaviours and habits involved so you can make positive changes.
It’s also critical to understand whether or not you have sufficient income to service your debts and
expenses. When your expenses exceed your income, it is all too easy to reach for the card and quite
simply this is not the solution. It may feel like an impossible situation but you can turn it around with
professional advice and a good amount of determination!
4. Make a Budget and Stick to It
Once you’re completely aware of your real financial situation, you’ll be in a better position to take
control of your household spending. Creating a budget will help you get a clear view of your income,
expenses, debt repayment, and whether you need to make any adjustments.
Your budget will cover not only all essential expenditures, but also your debt repayments. To achieve
this, you might need to his might involve cutting out unnecessary items like takeaway coffees or
rethinking your entertainment budget.
To make this easier, recruit your friends and family into this process. Let them know you’re sticking
to a new budget to become better at managing your money. Enlist them to help you stick to your
goals, be supportive and hold you accountable.
5. Consider All Your Debt Reduction Strategies
For some people taking control and getting on top of their debts by following these steps above just
aren’t enough on their own. It’s okay to need a bit of extra help to get things moving faster. In fact,
some debt solutions might even help you save a lot of money in the long run.
For example, you are meeting your minimum mortgage and credit card repayments but just don’t
seem to get the principal down.
Exploring your options to make sure you have the best deal when it comes to your home loan or
credit card interest rate are also types of debt solutions. It pays to invest a little time to explore what
options are available to you.
6. Save yourself a safety net
For you to consider yourself as a good money manager you need to have saved yourself a safety net.
What is a safety net? It’s cash that you keep separately from your transaction account that is there
for a rainy day. It’s not to save towards a goal or to help you pay off debt. It’s simply there in case of
emergency.
You can’t anticipate what will happen in the future. You might need to pay for car repairs or you
could lose your job. While nobody wants to think about these things happening, it’s better to be safe
than sorry. Having a safety net to draw from will keep you from relying on debt to get out of these
binds. One financial emergency shouldn’t spell disaster for your budget.
Make Your Finances Work for You
Your money should work smarter, not harder. If you’re feeling overwhelmed by what steps to take
first, remember you can take this process slowly. Any step forward is a step in the right direction.
These steps above can help you better manage your money better and pay down your debt, if you’d like professional help with paying off your mortgage faster then simply hit the link below and we can organise a time to have a quick chat about the options.
