ThisÂ is a guest post by Financial Information Blogger
Recession! Recession! Recession! No other word has impacted us more in the present times than this, and why not?
You know as well as I do that we need food to fill our stomachs, and that comes with a price.
You might be apprehensive about keeping your kitchen fire alive during this financially lean period. Donâ€™t worry; Iâ€™m here to give you some simple tips that are really working for me.
Believe me; I never knew that I could develop immunity to the recession so well! These tips are not only for managing the present crisis, but they are going to help you in managing your money well even during the boom period.
A little adjustment here and there is going to work wonders for your financial health. After all, itâ€™s your money, and it pays well to spend this precious commodity wisely, regardless of a boom or bust.
Your money management project will be like any other successful project, which starts off well, proceeds well, and ends well with all the risk factors being taken care of.
Starting Off Well Is Half Work Done
Wise money management starts with identifying ways in which you can slash your present expenditure. This is not to say that you should just keep drooling over a piece of pie at the bakers and not buy it, but to reduce the number of pies you buy every week. In other words, Iâ€™m not asking you to starve but to cut down your extra expenditure. Iâ€™ll give you the step by step procedure that I follow to do this:
- I jot down my daily expenditure in a diary. I know, it takes patience to develop this habit, but youâ€™ll see that when you find money disappearing from your wallet day in and day out, youâ€™ll know where it is going.
- The day I get my pay, I celebrate for being the proud owner of some hundreds of dollars. But I know that my riches will desert me fast, if I donâ€™t protect them from my eager-to-spend hands. I make a budget, which gives me a clear picture of my income and my expenditures. Immediately, from experience I know the expenditures that are mandatory and those that are optional. I control the optional ones as much as I can.
- Even after making a budget, I could make out that I was not faring as well as my colleague who draws the same salary, but is able to save more. I went to a financial advisor, who pointed out loopholes in my present pattern of spending. I was amazed to see drawbacks in my way of spending that I was unaware of. He suggested some superb strategies for investing my money because of which Iâ€™m financially very healthy today.
- I am not an avid user of credit cards. I believe in paying cash most of the time because I donâ€™t like the idea of buying things on debt, if I can spend cash and settle the deal. I also noticed that my credit amounts piled up uncontrollably because the concept of getting things without having to pay immediately made me pick up more things than necessary whenever I visited malls. The frequency of my visits to the mall also increased without me being consciously aware of it. So donâ€™t use credit cards as much as possible.
- If you really have to use credit cards (I understand that you need to really use it in some cases like when you are traveling) go for those cards for which the interest rates are low because if youâ€™re not able to clear off the borrowed amount every month, youâ€™ve had it.
- I created a CD (Certificate of Deposit) Ladder with my bank savings account.Â Â If you arenâ€™t clear about what a CD Ladder is, it is a scheme of depositing money in banks for which they pay you interest for the term agreed upon. If you want liquidity of cash and good interest rates, go for a CD ladder in which you fragment your total investment, make short term investments and use the interests you get on these investments for investing in new schemes. This process is a slightly complicated one and I advise you to just visit a bank that offers CD ladders for understanding the process thoroughly.
These strategies helped me in preventing my finances from going haywire. I was happy that I was able to check my extra expenditure and channelize my monetary resources well.
In the next step of money management, Iâ€™ll give you some easy-to-follow steps that will help you in checking your extravagant nature. Donâ€™t feel bad when I tell you â€œdo this and donâ€™t do thatâ€ because the benefits of such restrictions are very fruitful. After all, in this materialistic world, money rules and gives security.
Resort To Money-Saving Lifestyle
Well, I can sense a streak of disappointment, reading the title! Wait a minute; let me explain the concept to you.Â A money saving lifestyle does not necessarily mean a modest lifestyle full of hardships. It only means that by making certain easy adjustments in your lifestyle youâ€™ll be saving a lot of money. There are some modifications that I made to my lifestyle and I am a richer, happier and healthier person. Just read them below:
- Take homemade food to office – Till a few months ago, I always used to eat at a fast food restaurant near my office at lunch hour. The menu was delicious and the food out there was an addiction. But during the recession, I could not afford that $5 pizza everyday. I thought of an alternative. I started taking homemade sandwiches to office for lunch. They were easy to make and healthier than the fast food joint pizzas. The sandwich was cheaper than the pizza, as it carried no extra cost owing to business profits and service charges. Â To my pleasant surprise, I started shedding weight owing to the less fattening ingredients of the homemade sandwich. Â An occasional treat at a restaurant, a hotel or a fast food joint does not burn a hole in your pocket, but eating outside everyday is something that is best done when you have money to burn.
- Forget beverages, drink water – When thirsty, I would guzzle up a bottle of my favorite soft drink. I found that it was not only expensive but bad for my health too. TV commercials push these beverages claiming that their isotonic salts quench our thirst but this is just a myth. Nothing is better for your health and wealth than a glass of pure water when you are really thirsty. Drink beverages but not regularly.
- Repair that old and run down article before itâ€™s too late â€“ Whether itâ€™s the human body or a household article, I have only one message. Keep it in good condition and fix the slightest problem at the earliest. This will save you a lot of money. If youâ€™ve got a health ailment go to the doctor, donâ€™t wait for it to worsen because it will cost you more to get it treated then. Moreover it might cost your life, if itâ€™s too late. The analogy stands good for any household article or vehicle.
- Donâ€™t overstress those temperature controlling appliances â€“ I found that constant usage of my air-conditioner or room heater made my electricity bill soar up. Moreover, during extreme weather conditions, I would set the thermostat settings at a large difference to the natural temperatures. This would stress out my machines causing them to consume more electricity making my bills soar up.
- Beware; donâ€™t get trapped in the discounts and free gifts trick â€“ These days, when I walk through malls, I see huge hoardings announcing huge discounts on shirts, pajamas, toys, food, shoes, upholstery, jewelry, perfumes, etc. Just be careful! These are simply tactics to make you buy more. Not only that, donâ€™t ever fall into the â€œBuy One Get One loopâ€. Youâ€™ll simply dupe yourself into buying things that you actually donâ€™t need or need in smaller quantities. Clipping coupons concept is somewhat similar.Try and save wherever possible, rent textbooks, instead of buying them if you can.
- Scrap landline phone connections when youâ€™ve got a cell â€“ Landline phones connections are too expensive to maintain. Youâ€™ve got to pay huge amounts only for keeping the connection intact, even if you donâ€™t make a lot of calls. Get a cell phone connection with prepaid charges and pay for what you use, nothing more than that.
- Give your car some rest, just walk â€“ There was a time when I simply could not live without my van. Even to a restaurant that is just a mile away from my house, I would take my van. As a result, my belly grew along with my fuel bill, due to lack of exercise! During the lean period, instead of using my van, I started walking .This not only saved me a lot of fuel and maintenance costs for my vehicle but also made me slim and fit. After all, walking serves as a good cardio exercise.
Identification of faulty expenditure practices, making the right investments and lifestyle adjustments raised the readings of my wealth meter. I was no longer one of those thousands who were struggling to survive. I was a successful survivor – a Darwinâ€™s survivor, who proved to be one of the fittest people to survive the recession!
Ending narrations of my fiscal escapades without letting you know how I recovered after slipping several times, will leave my message incomplete. Just check out what Iâ€™ve done to control damage:
Recovering From Blunders
To err is human. Despite your best efforts, taking inappropriate action is inevitable even if you are an expert at managing your monetary resources. There might be times when youâ€™ve got to face trouble for which you are not to blame.
- Banking and financial agencies always came forward with attractive loan offers, but I would always resist them because I wanted to avoid loans as much as possible. Being a businessman, there were times when I got offers to invest in new ventures by taking secured loans. But I was wise enough to realize that secured loans are quite risky and if the venture fails, youâ€™ll be losing your property, and will be taken to task by credit report agencies. I believe in saving up enough money for investing rather than take loans when I donâ€™t have repayment capacity.
- Donâ€™t be a lamb for the credit agencies. Donâ€™t take a loan, but if you do; you have to know your rights very well before you take from anybody. There are lending agencies that take advantage of your vulnerable position as a borrower and try to dictate terms that are much beyond fair limits. Go ahead and brush your knowledge about your rights with a Privacy Rights Organization.
- I donâ€™t encourage taking huge debts on credit cards because these agencies will rightfully be after your life, if you are not able to pay them. If you really have to use credit cards, and if you are in a soup, just let them know that. They will work out a solution for you. This is referred to as debt negotiation.
- I feel that taking consolidated loans is better than taking individual ones. It will save you the headache of penalty on delayed payments, and higher interest rates. For students, consolidation loans are really helpful. The one time payment facility of consolidated loans saves you the trouble of penalty and extra payments which you can use to pay up your main loan. This will pull you out of your debt faster.
- Choose the lender carefully. My e-mail was literally spammed with emails from lending companies, when I was contemplating taking a loan for buying a property. I was tempted by the offers of many lenders, but was cautious enough to choose a lender with reliable credentials and genuine intentions. Unfortunately, if you ever get trapped by a lending company that is not fair to you, youâ€™ve had it! I always read the fine print before committing to anybody. Donâ€™t ignore the fine print. It takes a bit more patience to go through it, but youâ€™ll not regret your decision for doing so. There are too many cases of borrowers being duped by criteria that they overlooked before committing.
- Never go bankrupt, even if drowned in penury. Never loan more than what you can pay back. Youâ€™ll simple scar your debt history. It will remain on you for about a decade and will prove to be an obstacle in taking loans in future even when you are in genuine need of it.
- Go through your credit reports carefully for any unexplained or unfair discrepancies. Donâ€™t ignore them. If necessary talk out the issues with the crediting agencies and sort them out immediately so that you donâ€™t have any problems later on. Bad credits are a burden that you can do without. Just consult credit report bureaus and note what they have to say about you. If you find out that you are not in their good books, take up the matter with them immediately.
- Above all, use your commonsense â€“ It really irritates me to realize that what we call commonsense is commonly lacking in us! Using this God-given commodity can really steer you clear of trouble. Your commonsense should tell you that all that glitters is not gold. So, just watch your step while you make progress and see how well you can survive in the toughest of times.
“All days are not same. Save for a rainy day.
When you don’t work, savings will work for you.”
Youâ€™re welcome to share your money saving tactics with me here!
This is a guest post by Financial Information Blogger, Involved in giving most useful & professional tips on how to manage you personal finance & other important aspects of financeÂ industry. If you like what you see here, please consider subscribing to their RSS