Keeping track of daily personal finances can be their cause for many people. For most, it is a balancing act to get revenues and expenses to come together. It testifies among other things TV programs like the luxury trap on TV3 about. In the luxury trap, we see a large number of examples of people who have totally lost their grip on their private finances and who, with their eyes closed, participate in the consumption party, even though they really cannot afford it.
How can it go so wrong that you even end up in the luxury trap? It is very much about getting an overview of the economy, and it can be difficult for many people. To help it, it is important to put in a proper budget that can help you get the overview. If you have a good budget, you can easily see if income and expenses are related. You can read more about putting a budget here.
How to manage your money
One of the first things you should do when you decide to control your private consumption is to find out what you really want to spend your money on. Once you reach the point where you get a profit on your private balance of payments, you can spend the money on something you really dream about.
You may want to go on a dream vacation or maybe buy a house rather than rent it? You can afford it if you have control over your expenses, but first you have to reach so far.
Start with the overview
You must start by finding out what you have spent your money on. Find all statements of account and write down the expenses in a spreadsheet. You must also remember to include amounts spent on shopping, food and such. Getting an overview of all your expenses can be a task, but it is necessary to clear them up. This is the next step in the process.
The reason why there has been no profit is that you have spent more money than you earn. Therefore, you have to cut costs and to do so, it is important that you know what you spent on your money.
Find places to save
Once you have an overview of all your expenses, review them one by one. Is there anything that can be dispensed with, or maybe cheaper? Do you have a fitness subscription that you only use once a month? Then it may be cheaper to pay from time to time, or buy a rock card. It may also be that you have an expensive mobile subscription that you do not really need.
You must also critically follow your shopping habits. Make sure you decide in advance what you want to trade so that you do not become a victim of impulse purchases and shop for a whole week at a time, so you can often save money when you buy larger quantities. Then, of course, you also need to avoid the expensive supermarkets and shop discount where possible. You can often get the same products cheaper by trading in for example Netto rather than SuperBest or Irma.
In this process you have to be hard-wearing. You have to cut some expenses away, it is not enough just to lay a budget that also needs action.
Do you control your debt?
Once you have an overview of your expenses, you must also keep track of your debt. The debt can be divided into two types: short-term and long-term debt. The short-term debt is typically expensive consumer loans and credit cards, which are expensive, as interest rates and costs can be high. If you have ended up in a situation where there is a deficit, it will often be easy to take up new consumer loans, and then you sit well and thoroughly in the luxury trap.
Do you have many small loans? Contact your bank and hear if you can’t get them together for a single. Then you can often save a little
Make sure you get an overview of your debts. If you have a lot of climbing debt, you may be able to get an agreement with your bank on a total loan that can repay your debt. Otherwise, it’s just a matter of spending every dollar on paying your debt. It is also important that you do not take up any new loans until you have paid your old debts.
Save up, it pays off
As soon as you have the opportunity, you should start saving money. Rather a small monthly amount than not at all. Get a separate account for the purpose and set an amount each month.
You need to use the savings for unforeseen expenses, and when you have built up a small reserve, you can easily use your savings for, for example, a holiday trip – It is more fun to have the money than to borrow it every year?
You do not have to start with a savings of several thousand dollars. If you have no more, a few hundred dollars can save you if you suddenly get a dentist’s bill, or the bike is stolen.
Get help with managing your money and personal finances
Can’t you even look to fix things? So start by talking to your bank or maybe you have a family member whom you can trust? It can often be what you need if you want to keep track of the personal finances, and remember that your bank will often be more than interested in helping you – It doesn’t cost anything to ask.