Daily Ways to Avoid Debt
If you’re struggling with household debt, even your everyday costs of living can seem overwhelming. Grocery shopping, your morning coffee and refilling the car with petrol can cause you excessive and unfounded guilt. Follow these five suggestions to keep your day-to-day spending under control and your household finances feeling more manageable:
- Record Your Spending – Write everything down. Your two-dollar cup of tea, your twelve-dollar lunch, the twenty-dollar shirt you had to have. Carry a small notebook with you or download one of the many budgeting apps available, and list every single cent that you spend. This may seem tedious, but at the end of the week you’ll have a much clearer idea of how much you’ve spent and what you’ve spent it on. You’ll soon start cutting out purchases that you recognise as unnecessary.
- Categorise and Prioritise Your Needs and Wants – You can organise your costs into three categories, essentially. First off you have the essentials; you need food, medical needs, utilities and rent. Cover these costs first before considering the rest. The next level consists of things that aren’t completely necessary but are ranked as important to you. These may include a gym membership, a haircut, a new computer or phone. These purchases are the things that, if money is tight, you can do without for a little while. Finally, there are the wants. The wants consist of the large cable package, expensive dinners, new clothes and sporting events. These wants are unnecessary. You can live without them and as such, they should be purchased sparingly.
- Budget Small – Create weekly or daily budgets to keep yourself in control of your spending. Your budget needs to be feasible, but if you create a large budget and then overspend on that you will find yourself in trouble. Keep your limits low so that if you encounter an unexpected cost you won’t have already depleted your funds. For example, allocate an amount for groceries per week and before you go shopping, write a list, making sure that the list falls under your budgeted amount. Most importantly, ensure that you stick to it!
- Stick to Your Debit Card – Your debit card is always going to be your best option. Save your credit card for emergencies and payments you’re positive you can pay off that month. By minimising your credit card bill, you ensure your ability to meet your commitments and reduce the risk of your getting into financial trouble.
- Create an Emergency Fund – This is for your future self. You decide what amount is viable. You may want to put your spare change into a jar, or put $10 into a drawer or bank account at the end of each week. If you are consistent, this money can form a fund to be used in case of an immediate necessity—a computer crash, a medical emergency, an unpayable bill.
Focus on your day-to-day finances. These small, daily habits and contributions will keep you on track and out of deeper debt.
For free, professional financial advice catered to your individual situation, give Get Debt Free a call today on 1800 98 10 70.
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