Managing your financial affairs can be tough. With bills to pay and all of life's essentials to purchase, it can all be a delicate balancing act. Plus, this is not even factoring in the possibility of a financial emergency cropping up.
Do not believe that a financial emergency will never strike, either. Whether it is a car breakdown or a funeral, emergencies that can decimate your bank balance will appear when you least expect it.
So, what can you do to make sure you don't get caught out?
Fortunately, there are several ways in which you can avoid slipping down into a money pit. As evidence, here are five ways you can improve your financial behaviour in a bid to avoid debt:
Do you find yourself scratching your head and wondering 'where the money goes' every month? Well, now it is time to take a look. Sit down with your last two or three bank statements and examine where every single penny goes.
Look at the bills you pay, the cost of the essentials, and the amount you've spent on non-essentials. Unless you know how much you've got coming in and, crucially, the amount left over after you've accounted for bills and essentials, you'll be in the dark about how much you can spend. Do this, and you ultimately leave yourself at risk of slipping into debt.
Cut your bills
Once you're armed with the above information, you can set about improving the picture. Firstly, you should try to cut the amount of your income that is already accounted for. Take a look at the bills you pay and shop around on comparison websites to see if you can get your service cheaper elsewhere. More than two million UK account holders are in debt to their energy provider, and paying more than you need to will only increase your chances of adding to that number.
On top of that, see if there are any non-essential spends you could remove completely. Do you subscribe to magazines you never read, or pay for television channels you never watch? Maybe you spend more than you realised at the gym when you could workout at home for free instead, or perhaps you indulge a little too often in your pub or coffee chain of choice?
Small changes here could make a big difference in the long run.
Spending less is one way to improve the picture. Earning more is another. Maximise your earning potential by seeking a promotion. If that is not an option, try and take on extra hours or responsibilities to boost your wage packet.
Have you hit a stage where you cannot progress further in your current role? Even though you may feel that it is too late to switch to a new profession, the opportunity is always there to move into a more fruitful line of work. With the growth of online education platforms, it has never been easier - or affordable - to earn qualifications and degrees while you remain at work.
Alternatively, you could supplement your income with freelance work in the evenings or at weekends. There is an endless amount of ways in which you can land a freelance position. One of the most convenient methods is through writing, and platforms such as Freelancer and PeoplePerHour always have job opportunities available. Graphic design is also a great way to not only earn through projects for clients but also with a passive income by uploading designs onto a print-on-demand marketplace like Redbubble.
In the long run, every extra pound you make will help you to avoid sliding into the red.
Stop, think and save
About to part with your cash? Get used to asking yourself the following questions:
- Do I need it?
- Can I afford it?
- Do I need it now?
- Is this the best price?
By doing this, it will help you to consider purchases more carefully. Also, it might prompt you to shop around for a better deal or put off purchases for a while so that you can save up for them. If you're treating yourself, it is probably worth waiting a month or two if it means you'll be able to afford the item without dipping into debt to pay for it.
Rainy day fund
You should also try to save as much and as often as you can. Not everyone can put a significant amount of money to one side every month. Even so, work out a figure and set up a standing order so that it finds its way into your savings account. Even a few pounds each month will soon mount up and should mean that if you get behind - or have to pay for a significant expense - you can raid your rainy-day fund.
When you think about the expenses you can cut from your life, the savings can be directly added to the pot. If you make a daily run to, say, Starbucks each day before work, you could quickly build up a healthy nest egg by replacing that Frappuccino with a homemade brew.
...But if you need to borrow, don't panic
Adopting these spending practices should put you in the best possible position to avoid debt and stay debt-free. Yet if you do all of this and still find yourself short and thinking "I need a loan", there is no need to worry.
Even the best financial planners need a bit of help from time to time. An unexpected expense can easily throw you out and leave you requiring quick access to finance - and it's not unusual for a job to not work out, or for your boiler to break!
At Car Cash Point, we can turn around logbook loan applications in an hour, helping you to raise short-term finance on your vehicle and bridge that financial gap. Do not worry borrowing money is natural, and if you pick an appropriate funding source, you can pay off your debts swiftly and sensibly so that debt becomes a manageable solution rather than a problem.