Making ends meet in a recession can be far from easy for some people.
The cost of living is continuing to rise, whilst wages stay relatively flat and for some there just isn’t enough money left at the end of the month to live from.
For many people, the recession has made it more important than ever for individuals to keep track of their finances and to ensure that they don’t overspend. This article explores some top tips for keeping your finances in order.
Pay off your bills first
Many people get into financial trouble at the end of the month because they weren’t aware what proportion of their wage counts as disposable income. By paying off important expenses such as credit card debts, car loans and household bills at the start of the month, it becomes much easier to see how much money you have to spend on less important expenses like clothes or entertainment etc.
If these bills aren’t due to come out at the start of the month, it might be worth transferring a certain percentage of your monthly wage into a separate account for your direct debits. This way, it’s more difficult to be tempted into spending money which you don’t have, becoming overdrawn and having to pay bank charges.
Have money to fall back on
This is easier said than done in a recession but having some savings to fall back on can be a lot more beneficial than neglecting to pay bills or using a bank’s overdraft, as these often result in large charges.
Using your savings to avoid these charges can save you a lot of money – and you can always reinvest into your savings when times aren’t so hard.
Track your expenses
Those who keep track of their spending, perhaps by writing down everything they spend, are more likely to become aware of how much they are wasting on unnecessary purchases.
Jotting down how much cash you are wasting on snacks, coffees, alcohol, cigarettes and other needless expenses might help you realise where you can cut down your spending; helping you save money for the important things in life like food/rent.
Set budgets
Rather than just setting a budget on how much money you will spend this month, consider placing limits on your spend for certain items. For example, perhaps promise yourself that you will only spend £100 on food for the month and £100 on entertainment. This makes it easier to keep to a monthly budget.
Look for financial assets
A financial asset is anything that can help make you money without demanding any of your time as a result. A second home is a great example of an asset, as are bonds, shares or a small business. Many financial advisers would suggest that assets are the best way to generate a larger income – although they can be quite expensive to invest in.
Those who follow these tips might find that a recession is not as hard to live in as it once seemed.