Household

So what can you do to manage your finances?
The main thing that you must do is to take control of your finances. I know that it is easy to say but it can also be easy to do. What is not easy to do is to wait until you have a problem and then, in a stressful situation, to try to find all the bills and to work out what is going on!

First - reduce your costs (outgoings)
If you are going to reduce your costs you need to know what they are! An obvious statement but once standing orders or direct debits are set up they can go on for years without people realising that they are no longer getting value for money! The key to reducing your outgoings is to look at where all your money is going and to ensure that you are getting value for money on those items that you need.

Second - increase the household income
This does depend upon your circumstances, some people may not be in a position to do extra work. But many people are and there are many options for everyone to earn some extra cash. For example there may be benefits that should be claimed.

Control your bank account balance.
If you make mistakes with your bank account, then it will cost you money. You may have plenty of money but still go overdrawn. The banks fine you if you make a mistake! You must take the time to understand your bank account.

You really don't want to put a lot of effort to save money and discover that it was a waste of time because you waste money on bank charges or payments are being taken out which shouldn't be!

The buffer and emegency fund are good practices if you can afford them! Planning your finances is essential but you cannot plan how to manage your outgoings if you have reached the point where you have run out of money!

Some useful tips

If you received an unexpected bill such as a car repair bill, your washing mashine or boiler breaks, etc what would you do?
If you don't have this sort of cash floating then you could have a problem with the bills that month. So it makes a lot of sense to put an effort into having an Emergency Fund which is only used when you have an emergency!

Another useful tip is to have a buffer of, say, three months outgoings in a bank account or a savings account. Then if then you have a month where your outgoings exceed your available money you will not have a disaster with paying bills and suffering penalties. Of course you can ignore the situation but the opportunity is there with a three month buffer to take the steps to get back into financial health.