Lots of people find thinking about money turns their stomach. Worrying about your finances can raise your blood pressure, stop you from sleeping, and even make you sick. It’s not pleasant when you’re anxious about bills coming in because there will always be another bill coming in. They can’t be avoided.
Unfortunately we have to pay money out every month to cover the household costs and to put food on the table. Beyond these essentials, chances are there are a few other bills that arrive in your mailbox each month too. No wonder we all worry so much about our finances! Here are just a few of the reasons why it’s so easy to find yourself worrying:
You don’t know how much you have coming in
More and more of us have incomes that fluctuate each month. You might be self-employed or a freelancer. Perhaps you have your own business? Some of us earn by the hour, but there is no guarantee how many hours we might be allocated. This is a very precarious way to live because you can’t be sure you’re going to meet all the payments you’re responsible for.
There are two ways to tackle this problem. The first is to add up as many months of pay as you can find records for. Now divide that total sum by the number of pay chits you have. This is your average income. The second and more conservative approach is to go through all those statements and find the lowest figure. Using that figure as your base income amount should reduce the risk of finding yourself short one month.
To overcome any problems with a fluctuating wage, aim to find employment with a guaranteed monthly wage. This might be easier said than done, but it is a good way to help you ease your worries about your income. Many people that struggle outside of a strict routine worry about money because it can become so unpredictable. If this sounds like you, then try a career change to help you live with a little less stress.
You don’t know how much you’re spending
This is a really huge problem if this is the case. To ease your worries about your financial situation, it is important that you are carefully monitoring your spend. Some people check their bank accounts daily. Others use only cash so they can see how much money they have left at any point in the month. These techniques are just some of the ways you can retake the reins when it comes to your spending.
To see how much you’re spending, go through all the receipts you have. Check all your bank statements, and scrutinize your credit card bills. You might want to divide up all of your spendings into the following categories:
Going out and eating out and entertainment
Clothing, cosmetics, beauty appointments
Rent or mortgage bills
Household maintenance and cleaning
Internet and phones
Kids clothing, toys, books, etc.
Car taxes, maintenance, purchase repayments
Fuel for the car
You might have other categories too, or prefer to group some things together. Ultimately, you’re looking to determine how much you spend on the essentials, and how much you spend on things that could be cut out in an emergency. For example, if you had no money for it, you could easily give up your TV subscriptions. You could take the bus instead of refuelling your car. And you can get that amazing dress next month.
You’re not sure how much your household bills cost each month
Household bills can easily go up or down. Much of it will depend on the weather. The energy companies themselves seem to randomly put the bills up when it is most likely to hurt too! Don’t panic just because a cold winter is coming. There are ways to get ahead of the weather. All you need to do is calculate how much you’re spending.
Start by going through your bills. Chances are the energy company has put an annual calculation somewhere on the statements. Now you can divide this by twelve. Start putting that amount away every month in advance of the next bill coming. That way you will have the cash there instead of borrowing to cover this essential expense. Another way to see how much you use is to take daily meter readings for a few weeks and work out the average cost per day. Be wary of fluctuations in the temperature. If you’re off work and school, you’re likely to use more energy for those days too.
Other household costs might include your water usage. Again, this will go up on the days you are all at home. Your rent or mortgage usually stays quite steady from month to month. However, if your mortgage is currently at a variable rate, it is likely to be a slightly different figure each month. Changing your mortgage to a fixed rate will ensure it is exactly the same cost every single month. You can usually choose to overpay by up to 10% as well if you’re keen to clear it off sooner.
Taxes and insurances on your property can’t be avoided either. These are usually fixed, so you know what you’ve got to pay each month or year. Internet access has become an essential service. However, data on your smartphone contract might be used instead. Why not see which is cheaper for your usage? It might be best to pick one or the other instead of paying both.
There are a couple of other expenses that you can’t really predict. However, it really is worth putting a small pot aside for emergency repairs and maintenance costs. That way you won’t need to borrow because the money will already be there. Perhaps you have a second savings pot for future upgrades for your home?
You’re not sure where you can save money right now
When you’re thinking of saving ahead, you might also want to consider saving now. There are lots of different ways you can save money on all your bills. Start with your grocery bill. How much of your spend on food and drink was for items that don’t really benefit your health? If you can’t afford treats, candies, cakes and snacks, cut them from your food budget right now.
Energy bills might fluctuate, but you can make sure they are as low as they can possibly be. Solar panels are one of the best ways to reduce your electricity bill. Use your high-energy appliances while the sun is shining, then it will cost you nothing! If this isn’t practical for your home, then aim to turn the heat and cooling down, turn off lights that aren’t being used, and add insulation to retain the heat you use.
Your rent or mortgage can usually be reduced by moving to a smaller home or cheaper neighborhood. Of course, most of us want to avoid that if possible! Renegotiate your rental agreement whenever possible. And keep your eye out for a good mortgage deal. Low-interest rates and shorter terms save you the most money in the long term.
If you’ve got a number of credit cards and personal loans with balances outstanding, you can save on the repayments. Stop using any cards you’re not able to clear off each month. The interest rates will make every purchase far more expensive than the ticket price. You might want to find a consolidation loan product. This clears off all your existing debts immediately, so you are no longer tied to high-interest rates. The loan usually lasts for a longer term than some other products you’ve used. However, if the interest rate is lower, it might work out cheaper. Find more info on this type of loan online. Make sure you check the repayments are affordable too.
You don’t know if you’re financially secure
Financial security would be nice, but in reality, it’s rare. In simple terms, you need to make sure you have a pension that will cover your essential outgoings. You might also need a good college fund to secure your child’s academic future. No job is guaranteed to last forever, but if you work for a reputable firm you have a better chance of it lasting. Continue training and pushing your career forward so you can continue to earn well. It might also bolster your resume should you find it necessary to go job hunting in the future.
Insurances to cover your essential payments if you were unable to work can be useful. In some cases, they are a requirement if you have a mortgage. If you have a medical condition that is expensive to manage, explore alternative health care plans to help spread those costs.
It’s really important you have a detailed budget that you use, monitor, and adjust regularly. Living frugally can help, but try to put aside a little pot for fun things too! Worrying about money isn’t good for your health so why not tackle the troubles today?