The golden rule is if your outgoings exceed your incomings on a regular basis you are heading into the red and need to do something about it. Time to get back to black.
Increasing what you bring in by finding a better job is one way. But in the short term, virtually all of us have plenty of instant pain-free ways to chop our spending.
Here are JASMINE BIRTLES'S tips to fixing your finances:
DO A BUDGET: Anyone can do one – you can even do it on the back of an envelope.
Just make a list of the money coming in every month and then a list of the money that has to go out every month on essentials.
Once you take away the money that has to be paid from the money that is coming in, you will know how much you have to play with each month.
DO WHATEVER WORKS: There are no hard and fast rules.
Some people keep a spreadsheet with details of every single penny they make and spend, others have coloured envelopes in the kitchen with cash in, one for the gas, one for council tax and so on.
It doesn’t matter how you do it so long as it stops you getting into debt and helps you save for your future.
DEVELOP NEW THINKING HABITS: Any time you go to buy something ask yourself: “Do I need this?”, “Could I get it cheaper somewhere else?” and “Could I put off having this until later when I have more money?”
After a while it will become second nature and you will keep looking around for good deals and realise that you can get along very well without half the things you thought you needed before.
MAKE IT FUN: Give yourself a challenge each month to see how much you can “WIN” against the system by getting as much as you can for free, only buying things if they have a discount and not buying things you know you don’t need.
KEEP A TALLY OF HOW MUCH YOU AREN’T SPENDING: Add it up at the end of the month. See how much better you can do each month at NOT spending.
CUT UP YOUR CREDIT CARDS EXCEPT ONE FOR EMERGENCIES: If you’re still tempted to spend on that one, put it in a bowl of water and put that bowl in the freezer.
That won’t harm it but microwaving it will, so if you’re desperate to buy something now you will have to wait for it to melt.
Hopefully, in that hour or so, that desperate need to buy will fade and you will have helped yourself not spend money.
PAY YOURSELF FIRST: Everyone needs to have a “rainy day” savings account but lots of people tell me they don’t have any money left over at the end of the month.
That’s because they are doing it the wrong way round. Set up a standing order to transfer a bit of money from your bank account into a savings account at the beginning of the month, when you pay your other bills.
That way you will be paying yourself first before you pay the supermarkets, bars, restaurants and so on.
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