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5 Tips to Help You Regain Control Over Your Personal Finance

Dealing with expenses, allocating income, and keeping up with debt repayments can be a daunting set of tasks to complete. They become even more daunting when you start running into issues with repaying your debts or expenses. Even worse, many of the personal finance tips and tricks available online are not suitable for those who suffer from debt problems.

Having difficulties paying your bills or debts doesn’t mean you cannot regain control over your personal finance. You also don’t need to have complex strategies to be able to manage your finances better. There are simple things you can do to reorganize your personal finance and return to a healthy cash flow, and we are going to review them in this article.

Use Cash

You’ll be surprised by how effective using cash can be when it comes to dealing with bad financial habits. Credit and debit cards are handy and convenient, but you don’t always get the sense that you are spending money when making payments using your cards. Switching to cash, on the other hand, allows you to be more meticulous with your expenses in an instant.

Start with a simple goal: using only cash for one week. Leave your cards at home and use only cash for everyday expenses. Stick to the plan and complete that one-week period, and you will gain a new perspective altogether. Next, repeat the process, only this time do it for two weeks.

Continue using cash until you can really manage your spending habit in great details. You can also use this training to get used to writing down every expense you make no matter how small it is. At the end of the month, you have a detailed list of expenses that you can use to make monthly budget for the following months.

Learn to Budget Your Income

Creating a budget for the month is the next step to take. As mentioned before, you can use the list of expenses from the previous month to help you better understand how you are spending your money. Allocate portions of your income for specific expenses and use a money management app to help you monitor your progress.

While creating your monthly budget, you also need to cut expenses that are not absolutely necessary. Since the goals are repaying your debts and gaining control over your personal finance, trimming expenses and making do without the non-essential ones is the way to go. You can then allocate the extra money towards your debts.

Back to keeping track of your progress, using a money management app is how you stick to the plan. You can monitor your expenses in real-time and see whether you are in budget using charts and other visuals.

These tools help you take control of your expenses as you go along. When you see more than 50% of your entertainment budget already spent after only one week, you know you have some cutting back to do. More importantly, stick to the plan no matter how tempting it may be to veer off.

Start Looking into Your Debts

The previous tip is actually another exercise. You are training yourself to be more aware of your spending. That spending awareness is handy and comes with an added benefit: you can review your debts just as meticulously.

Take a closer look at your debt repayments and write them down. Include additional information such as the interest rate, the remaining balance of the loan, and fees or other charges you have to pay if you continue using the loan. Lenders such as Emu.co.uk display this information prominently.

With the details listed, it is time to review your options. If you have multiple credit card bills that are expensive and hardly manageable, for example, you can choose to consolidate them using a personal loan or a consolidation loan. You will end up with one repayment amount while saving a lot of money on interest and other charges.

For bigger – secured – debts, you can also negotiate a restructuring deal, find balance transfer deals for secured loans, and weigh other options available to you. The goal is eliminating expensive loans and saving money along the way. The money you save can then be allocated towards repaying the remaining debts.

Keep It Simple

There is one thing you need to understand about regaining control over your personal finance: it will not happen overnight. When you have a lot of debts to repay and expenses to cut, you will have to go through some discomforts before you start seeing results.

That is why keeping the entire strategy simple is a must. You know how you can raise more money to repay your debts; you can either find new sources of income or cut your expenses, with the latter being the easier of the two. All you have to do now is stick to the plan, continue making small adjustments, and work your way towards improving your cash flow.

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Frequently Asked Questions About Creating a Monthly Budget

Having a monthly budget – and, more importantly, sticking to it – is a big part of personal financial management. When you allocate your income when you receive them, you are more likely to save money and less likely to waste it on unnecessary expenses.

Creating and maintaining a monthly budget for personal use is also easier than you think. There are apps that can help you keep track of your expenses and provide the necessary information for making a monthly budget. Some apps will even create the budget for you using artificial intelligence and deep insight of your spending habit.

Still, there are still misconceptions about having and maintaining a monthly budget. Some see it as a daunting thing to do, while others have questions about how to best manage their budget. To help you get started with your own budget, we are going to answer some of the most frequently asked questions about creating a monthly budget.

How do I start?

“I don’t know where to start.” Does this sound familiar? That is because many people who are just getting started with personal financial management genuinely don’t know how to get started; you may be in the same condition too. When you have a lot of expenses to pay, debts to manage, and income that are not managed properly, getting started with creating a monthly budget can be challenging.

The easiest way to get around this obstacle is by looking at your expenses first. Spend some time writing down all of your expenses to the last penny, and then categorize them accordingly. If you still cannot list your expenses in great details, spend the month writing down every expense you make as soon as you make it as a way to get started.

With expenses written down and categorized properly, you can begin reviewing how to best allocate your income. More importantly, you can start seeing your own personal financial state, as in you know how much you spend on debt repayments and how much you can actually save every month. Now is also a great time to cut unneeded expenses and save money.

How does a monthly budget look like?

The answer to that question is, well, however you want. While there are many theories on how to create the ideal monthly budget for personal use, there is no strict rules you have to follow when creating yours. You can set your own expense categories and organize your budget the way you like.

In fact, this is the best approach to take. At the very least, it is easier to stick to the budget when you are comfortable with it from the beginning. You also have more freedom and flexibility as you craft the ideal budget for yourself.

That said, there are some goals you want to achieve in order to have a healthier cash flow, starting with saving a portion of your income for future investments. You want to set aside at least 10% – ideally 20% – of your income as soon as you receive your pay check and save it.

On the other hand, you can also allocate more money towards repaying your debts, especially when you are in a pinch with your loans. The more debts you repay, the more money you free up, and the more you can allocate towards other needs, including saving and investing.

I have a budget. How do I stick to it?

Sticking to the plan is the hard part. Creating a budget is only the beginning. The next part of the equation is monitoring your expenses in order to stay in budget. This is best done with an app or a money management software, since you can keep track of your expenses in real time.

You also have visuals to help you monitor your progress as you go along; they make staying true to your monthly budget easier. You always know when you overspend, and you can make corrections to your spending habit immediately to avoid future problems.

What if there are unexpected expenses (or emergencies) to deal with?

We’ve all been there; we try so hard to stay within the budget, only to run into an unexpected expense or a financial emergency that throws everything off balance. Yes, emergencies and unexpected expenses are difficult to deal with, but how you deal with them matters.

You have plenty of financing options and loans to help you fill gaps in your monthly budget. What you need to do is find a solution that works for you, particularly a loan that you can repay without hurting the budget for next month.

You also need to make some sacrifices. After all, the extra expenses still need to be covered. Save more on non-essential expenses and consider finding new sources of income to help balance your budget.

Having and maintaining a monthly budget is how you maintain control over your personal finance. It is not always easy to get started, but the tips and tricks we covered in this article will help you create your own monthly budget – and stick to it – in no time. 

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