At some point, everyone notices that no matter how hard you work, you always miss something. You always feel anxiety or pressure by the end of the month. The mere thought of emergency gives you chills. It’s alright because we know the answer!
Many people learn how to manage their budget in their late thirties and have no idea what to do if the emergency happened. Some people have the luxury of lending money from their families and friends, while others experience a vicious debt cycle hard to break.
Almost half of Americans cannot afford an extra $400 for covering the unexpected expenses, and 6 out of 10 households experience financial emergencies at least once a year. You are not alone in making mistakes when dealing with the crisis.
However, it is important to spot the error and start acting for the sake of your budget and future planning.
It is hard to adopt healthy money habits even if they seem easy, and you need to put some effort into achieving the best result. Here are some financial tips for making better financial decisions and feeling confident in your budget.
Impulse spending who?
Our brain is a miraculous thing. We react immediately to a nice looking picture of a car or smartphone. At the same time, we can strive for a specific lifestyle unconsciously because constant reminders that you must travel, you must look boujee, surround us all the time.
Otherwise, people will think badly of you.
The truth is everyone is desperately trying to reach this image, so they try their hardest to buy something expensive to feel better. How many songs are dedicated to the love of money and things you can buy with them?
Of course, money is not the villain of this story but the race for “appearing” instead of “being.” You may not be the richest person, but you must feel protected, warm, and full. Therefore, you should understand that impulse spending satisfies you only during a moment when you buy a thing.
Later on, it doesn’t matter how cool your jacket is if you skip a meal. Breaking down your needs vs. your wishes is an essential first step for reaching your destination.
Set your goals
Many times you may have seen advice to sit down and evaluate everything that happens in your life.
You should take a pause and think about your goals. What do you expect to achieve, why do you want it, and how you plan to reach it? The money is only a tool for accomplishing goals, but you should know the exact amount, as it will also help you reduce impulse spending.
When you set your goals, you set the priorities, what comes first, and what should wait until you save enough money. Either it is a vacation, the home of your dreams, or that cool jacket we were talking about previously.
You can use budget calculators for estimating the time and amount recommended for saving.
Creating a budget
A budget is not only about income. It is about planning your spendings according to what you have.
- Every month you should add your income with all side hustles, sales, freelance work, social support. Never miss even a penny to understand exactly how much money you have.
- List your expenses and divide it by categories, from main ones like food, utilities, home, and transportation to sub-categories like entertainment, restaurants, personal spendings, etc. The priority is always paying your bills, having a meal, and comfortably reaching point A or B.
- Track your expenses and see problematic categories that require more money than you expected. As soon as you identify where your money goes, you can start seeking a solution. The goal of budgeting is to have a zero-based balance or have a surplus that you will keep for a special occasion.
If you have irregular income, estimate the lowest salary, and put it as your income. Track your expenses and hold some things like having dinner at a restaurant for later. You should be flexible, and if you managed to get more than you expected, keep this money as an emergency fund.
It is up to you to organize your budgeting by tracking apps or writing everything down in Excel. The point is to visualize what you have and what you need.
Borrow only when needed
So, you set apart what you need and what you wish; you set a goal; and made a budget.
But then something unexpected happened, and you still cannot pay the expenses with the money you managed to save. It is a moment to evaluate your options with loans and whether you need to take a loan in the first place.
You can check all loaning options in your local bank or credit union and apply for a personal loan. However, if you need quick cash without impact on your credit history, consider payday loans.
Some lenders like paydayinusa.com offer you loans from $200 to $5000, which you can return within several weeks or two months.
It would help if you thought about loans only in case of an emergency. At the same time, read the agreement, terms of use, and other documents to learn your responsibilities and rights and calculate additional fees. If you think it is possible to repay the borrowing without problems, you are good to go.
Research purchases
Every purchase is an important step in your life. If you are looking for something essential for your house, you should consider looking for various offers and taking the one most suitable for your budget.
It is always a wise decision to discuss the purchase with your significant other or your roommate. If you are buying a TV, you may ask to split a check and save the other half for something you will both use.
On the other hand, it is healthy to think whether you really need it right now or it can be bought later. It’s alright to give these decisions some time for a second thought.