There are people who make money and have a lot to show for it, and then there are other people who make money and struggle to make ends meet, riddled with tons of personal debt. The difference between the two groups is that the first one knows how to handle their money. If you fall into the second group, fear not, there are ways to learn how to better manage your income.
When it comes to spending money on anything, weigh the pros and cons carefully. Making impulse purchases often leads to a feeling of regret. Say you want to buy a new car, but you own your car outright and it needs a few repairs. Here you weigh the pros to buying a new car as no worries of failure, you turn the key and it goes. A con, however, is that now you have another payment to add to your debt. If you can restore the car you own outright for less than a couple of thousand dollars, isn’t it worth it to wait on the new one for a bit longer? Taking on excessive debt can put you at risk for bad credit. And, while there are bad credit personal loans available, getting a mortgage for a home may become impossible.
If you spend everything you make, you have nothing left over in the event of an emergency. This is a common mistake people make with their money, they live for today and put nothing away for tomorrow. By taking a small percentage of your monthly earnings and putting it into a savings account, you can accumulate money for the things you don’t plan on. As a result, you’ll have the money you need and avoid a financial crisis.
Waste can cost you dearly. For example, your utilities. When was the last time you took notice of what you spend to operate the lights and the heat and air conditioning, and your water bill? These are bills that you have the ability to reduce. Get in the habit of turning out the lights when someone leaves a room, adjusting the temperature when you go to bed and when you are away from home, and running appliances later in the evening. The cable bill is another area where you can save money. Contact the provider and change to another plan, or better yet, switch to basic service and rent movies from Redbox.
When you manage money correctly, you pay less. When you don’t budget your money, you will encounter periods where money is short. This then creates a vicious cycle of frequent late payments. Those late payments hurt your credit score which makes getting a premium loan nearly impossible and guarantees you’ll pay a higher interest rate. Late payments come with late fees, and if you overdraw your bank account you’ll receive an overdraft fee from them as well. Maintaining a higher credit score also makes getting an apartment, insurance and utilities without a hefty deposit, easier.
Learning to manage your money benefits you in every way. It helps you maintain good credit, enjoy paying less for most anything and it gives you peace of mind. The good news is that it’s never too late to learn the art of managing money.