People generally do not come into the world from birth owing lots of money to various people and financial institutions, so these debt problems are usually caused by people living above their means, and many people actually have shopping addictions due to underlying mental health problems.
Then, of course, there are those who just simply do not know how best to manage their finances. So for those of you that fall under this category, here are some ways to illustrate why it (literally) pays to organise your finances and avoid any nasty financial surprises!
Drawing up a income and expenditure list
The first thing to do on your quest to organise your personal finances is to draw up a list of how much money you regularly earn, and the things that you have to pay out for each week or month.
Once you have done this, you will then be able to determine how much money you have leftover to spend on yourself, your other half, your family or your home!
Save money for a rainy day
If you haven’t already got a stash of money in a savings account (such as a tax-efficient ISA), you should consider setting up one as soon as possible and putting money into it on a regular basis.
Life is very good at throwing up all sorts of “unexpected expenses”, so if you have a pot of money to draw from in such circumstances, you won’t have to panic about how you will pay for them!
Make sure that you put any regular savings payments under your “expenditure” list, as it is something you have to pay out for regularly – just like your utility or mobile phone bills, for example.
Top tip from financial experts Jubilee Debt Management: if you have a significant amount of debt, a more efficient use of any spare money you’ve got would be to clear your debts off first rather than save money.
Pay your bills by Direct Debit
Too many people pay for regular bills by bank transfer or debit card. The main problems with paying for bills this way are as follows:
You might not pay on time – we all lead busy lives, and forgetting to pay a credit card bill, for example, will result in a late payment fee being charged to your account;
It will cost you more in the long run – many big companies offer discounts or don’t charge certain fees if you pay for your bills by Direct Debit;
Easier to budget – because you have a set date of when things must be paid by, it is easier to ensure you have the funds available to cover those bills.
Stay out of your overdraft
If your bank account has an overdraft facility, do your best not to use it. Overdrafts will cost you money, and should only be used in emergencies.