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A Guide to Rethinking Your Finances

by luxirare

Does it seem like no matter how hard you try, you always run out of money by the end of the month? No matter what your paycheque might look like, there will always be a way that you can rethink your finances so that they are easier for you to handle. By practicing good financial habits, you should be able to completely overhaul how you approach your spending, and it could be one of the best moves you ever make.

Know Where Your Expenses Are

Do you know what causes the big drains on your finances? If it seems like your money seems to slip out of your account and you don’t really know why, it could be a major indicator that you aren’t managing your spending properly. There are so many little things that you could spend your money on – a coffee in the morning, a snack to keep you going in the afternoon, a sneaky purchase to celebrate the end of the week – but all of these will begin to add up and you might not even know how much you are spending in total.

Sit down one evening and try to work out where you are spending a lot of your money. It will often be on these small transactions, or it could be a case of eating out one too many times. You will have to identify and work towards eliminating these expenses if you want to see a difference in your spending overall, otherwise the other changes that you make might be for nothing.

Learn How to Budget

Most people get a finite amount of money each month. Even if you are self-employed and can therefore have a variable paycheque each month, you need to know how to best manage it so you know how to spend it correctly. This means that you will need to learn how to budget correctly. A good budget will work wonders for you, and could help you to properly establish ways in which you can save money whilst spending sensibly.

There are many different schools of thought on how you should budget. Some might want to have a rough idea in their head that they stick to, others could be stricter and have a spreadsheet, trackers, and other tools that can give them a clear idea of what they are spending. 

It doesn’t matter how you choose to budget, but you do have to have one in place. If you are not used to properly budgeting, it can be very difficult to stick to this type of plan at first. However, you do need to make sure that you do so, as it means that you will then be able to approach any spending confident in the knowledge that it is within budget and unlikely to disrupt your finances for the month.

Boost Your Savings

With the right spending plan, you should also be able to save something, even if it is just a little bit each month. Being able to put away even £100 a month will build up eventually, and you can never know when you are going to have to call on this money. 

If you want to know how to save money fast, it is going to have to require some work on your part. There might be something that you have to give up when trying to save money fast, but skrimping and saving can be pulled off if you are able to meet a certain goal in a short amount of time.

Learn how to maximise your savings account at the same time. It isn’t enough to just leave your money sitting in your current account doing nothing. Find a savings account with a good rate of interest that you will be able to take advantage of. Ideally, this should be one that you cannot withdraw from for the first few months. You won’t then be tempted to withdraw money from it prematurely, and you should be able to collect a good bit of interest. Remember that the best savings account might not always be with your current bank. Don’t be afraid to open a savings account elsewhere if it means that you are going to get a better rate.

Find Alternatives for Your Big Spends

Take a look at some of the biggest drains on your account. Is there any way that you can continue these activities without having to cut yourself off? By finding a more cost-effective way of enjoying your favourite hobbies, you might be able to rethink your finances in a way that allows you to make the most of them.

For example, you might be a bit of a foodie who enjoys nothing more than trying out new restaurants and types of food. However, eating out constantly can be a real drain on your finances if not managed properly. One way around this could be to limit yourself to one restaurant meal a month. This allows you to go out and still enjoy your favourite foods in brilliant environments. Along with this, you could learn to cook. Doing so means that you can still enjoy delicious foods and it can be much cheaper than if you were to head to restaurants or get takeaways all the time.

Another example can be found in fashion. If you are one for always hitting the shops for the latest clothes, why not try heading to charity or thrift shops? You could find some real gems in the racks here, while learning to sew means that you could also alter the material of any clothes that you do happen to find. With nearly every hobby, there will be a way for you to enjoy it in a more cost-effective manner than you might at the moment!

Don’t Feel Guilty About Big Spends

When trying to actively make a difference towards your spending, it can sometimes leave you feeling a little guilty if you spend more than you should in a certain matter. You can’t afford to think like this. It will either get you into a rut where you feel like you can’t spend at all, or it will cause you to fall off the wagon and get back into bad spending habits. Neither is a good place to be. 

Instead, you need to make sure that you plan ahead for big spends, and that they are rational and sensible choices. Yes, it can make you feel a bit giddy when you spend hundreds on one item, but if it is something that is needed and wanted, there is no reason why it can’t form just another part of your spending for the month. 

How is your control over your spending? You need to make sure that you are able to manage your spending properly, whether it will be thrifty or a spend-heavy month. This is one of those adult skills that simply cannot be avoided, so you need to make sure that you are in the best possible position for you to manage it on your terms. Everyone needs to rethink their position on their finances. By doing so, we can all become far better at handling the money that we have. 

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