Managing Your Money
Individuals and families are feeling the impact of national austerity measures and, as a result, the amount of income left after paying for essential items is decreasing.
There are of course other factors that can contribute to financial difficulties such as illness, relationship breakdown an unexpected expense such as a fire, death, robbery etc. However, the financial year need not mean unnecessary stress and debt. Whatever your circumstances are we hope that, by encouraging you to look at your finances honestly, it will help you highlight where your money is going and start you on the first steps of budgeting and managing your money more effectively.
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A budget is a plan of money you expect to receive and how you expect to spend it. A budget is important because it will show you:
- How much money is coming into your household,
- How much money is going out,
- How much you can afford to offer to those you owe money to,
- How you can best plan your spending in the future.
While most of us find budgeting boring, it is absolutely essential.
- Track: Keep track of your spending. Keep your receipts or take note of what you spend your money on. It will help you understand where your money is going and it might just be an eye-opener.
- Budget: Estimate your income and expenditure for a set period and budget accordingly. Be realistic and don't underestimate!
- Save: Get into the habit of saving. Try to save at least 5% of your regular income for emergencies.
- Be Prudent: Shop around and get the best deals. Cost comparison websites can identify where savings can be made. Paying off your credit card in full each month will avoid you paying additional interest.
- Borrowing: There are times in our lives when we run short of funds. If you have to take out a loan, be sure you only borrow what you can comfortably afford to repay. You should match the repayment term to the purpose of the loan (for instance, don't make the mistake of paying off Christmas over a number of years).
It is inevitable that you will encounter unexpected expenses. At some time in all of our lives, things and events will crop up that we just didn’t see coming, whether it be something small (a small thing like a window breaking, or something much larger such as a car accident or the passing of a loved one).
Some people worry that an unexpected bill will derail their budget. The best way to prevent this is to plan for it. We cannot plan for these particular events, however we can all be assured that they will happen and so we should make provision now for when the time arrives.
Try to save enough to give yourself a small buffer you can use in emergencies. It need not be anything too great if you cannot afford it. You would be surprised how quickly saving even €5 or €10 put away per week can built up if we do it consistently and stick with it.
Don’t lose heart - examine where you went wrong and try again.
If you have severely blown your budget, find yourself in financial turmoil, and can’t repay your debts the first thing to do is to remain calm.
It is important to contact the companies that you owe money to promptly and tell them you are having financial difficulties and want to discuss payment arrangements. This is particularly important if you’ve used your home, or other assets to secure the loan.