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As the New Year approaches, we tend to start thinking of new goals and bad habits we’d like to change for the coming twelve months. And one of the most popular is usually to go with money. A lot of people tend to overspend at Christmas, leaving them in a bad financial position. Overspending is certainly a way of life for some, and never being able to make it to the end of the month without running into your overdraft is a depressing state of affairs.
Unplanned debt, especially that racked up on ultimately unnecessary consumer goods, is something that doesn’t seem bad at the time but can quickly spiral to unmanageable levels. Overspending each month is setting yourself up for a financial fall, and if you aren’t careful, it can end up in a downward spiral of escalating debt, further borrowing until it really begins to pinch. Stop this behaviour in its tracks and turn over a new financial leaf in 2019. Here’s how to knock overspending on the head…
What Is The Lifestyle You Can Afford?
The key is not to think of how you can get that shiny new car or luxury holiday, but instead to ask yourself what you can afford within your means. The answer is not a lottery ticket. It’s not browsing kaszinohu.com hoping for a win on blackjack. It’s not borrowing more to fund an unsustainable lifestyle. It’s quite simply redrawing the lifestyle you have to fit within your means.
Back To Basics Budget
Financial problems like this start because we are out of touch with the reality of our money situations. We’ve ignored the basic facts of income vs outgoings. It’s time for a reassessment. Looking at the past month’s budget isn’t sufficient because it doesn’t tend to take into account large annual expenses such as Christmas, the summer holidays or when the car needs servicing. These are the triggers that can often push us into bad debt. At this stage, gaining an annual picture of your finances is far more helpful. Set aside a couple of hours to create a budget planner based on what you have really been spending over the past twelve months.
Set Your Accounts Up For Success
Then, make sure your accounts are set up in such a way as will help you to manage your finances. Set up one account that your salary is paid into and your essential bills, such as utilities, come out of. Then, set up a second, linked current account, into which you’ll deposit a set amount each month – this is for things like meals out, clothes etc. Having it in a separate account with no overdraft facility means you can’t accidentally overspend. Finally, also set up a higher interest, lower access savings account. This is your long term pot of savings to enable you to meet your financial goals – saving for a house deposit or even retirement. Lastly, you may also want a secondary savings account with quicker access – this is your emergency fund for unexpected larger expenses such as car repairs. If all the accounts sit with the same bank, it’s easy to move money around online. By having that separate account for daily spending, and only taking that card around with you, you make it a lot harder to overspend and impulse buy by dipping into the money you need for essentials. Another method which is popular with some is to withdraw a set weekly spending amount in cash and consign the plastic to a drawer at home.