We tend to have a habit of spending a lot of money! It can be a fun thing to do but is also necessary as well. However, we may often not think about what we spend our money on and perhaps we would like that to change. It can be stressful if we do not always have the money we need for everything we buy or if we want to borrow less or put more in a savings account then we may like to change the way that we spend money and it is good to think about what the best ways of spending actually might be.
Pay for Essentials First
It is a good idea to start by recognising that there will be some essentials that you will have to buy. This can be rent or mortgage, taxes, pensions, utilities, contracts, loan repayments, food, travel etc. There are lots of things that we cannot do without. It is worth identifying what your essentials are as we are different in what we need to pay for. It can be fairly straightforward to do this but make that you do it carefully and actually check bank statements so that you do not forget anything. It is good to look and see when payments for these things come out of your bank account as well. You will find it easier to pay for them if they come out just after you are paid. This means that you should make sure that you set up any direct debits so they come out just after you are paid. This could mean that you might need to change some of the dates but you should find that companies will be happy to let you do this.
Think Hard About Borrowing
It is wise to think hard when you borrow any money. Borrowing can be an extremely useful tool, especially for paying for university or buying houses. However, you need to think about whether all of the borrowing you do is worthwhile. It is good to work out how much the borrowing will cost and then decide whether you think that it is worth this cost. It is something that can be a tricky decision to make but weighing up the pros and cons is worthwhile. Consider whether you think the loan will give you good value for money as it would with an instant short term loan and whether you feel that it expensive and carefully calculate if you will be able to afford the repayments.
If you have debts already then it can often be worth repaying them early. Do look carefully though to see whether this is the case. If you have a student loan, for example, it is usually not worth repaying it early as a majority of students never repay the whole loan anyway. Some loans will also charge a fee if you repay them early and it can be worth working out whether you think it is better to pay that fee and save interest by repaying the loan early or to keep the loan and avoid the fee. This will very much depend on how much the fee and interest are and so it would vary between loans. Most loans will be cheaper to repay rather than leave and so it is worth considering doing this.
Put Some Money in Savings
It can be nice to have some savings behind us. Having some money to fall back on in emergencies can give us a feeling of security. This means that we might like to have some funds. However, it can be better to repay debt than build up savings so you will need to think about which option will work better for you. Of course, if you have no debt then building up savings is great.
We all like to treat ourselves from time to time. This means that we will spend money on things that we do not really need but still enjoy. This is great reward for all of the herd work we have done by earning the money. However, we need to make sure that we keep this in check so that we can achieve everything else we need and want to with our money as well. It can be wise to set a budget when it comes to treats so that we do not overdo it.