We all mistakes. It’s what makes us human. Some are silly errors with no consequences. Others are highly embarrassing, and we’re left quite red-faced. But one or two in our lifetime may have financial consequences that can be costly and difficult to bear. It happens, but it doesn’t have to happen again. Here are just a few tips and tricks to help you avoid financial mistakes that could be more than just embarrassing:
Getting Out Of Bother
So you’ve made a mistake, and you’re short of cash this month. There are lots of ways this could happen –
You might have forgotten a big bill was due
You might have to pay a big repair bill or replacement for a broken down appliance
You might have overspent
You might have made a poor investment decision
You might have faced extra charges from your bank or credit card
We’ve all been there, and we all regret it, but you have to move on. After all, you’ve left yourself short of cash, and you need to buy some groceries! Of course, you also need to tidy up the financial mess you’ve made and clear what you owe.
Borrowing money isn’t always a first choice, but it might provide the temporary fix you need to get out of this sticky situation. Finding the funds needed to pay off the bill could be tricky if you don’t ask for help. You might need to approach a fast track lender or your bank. You could ask your parents, siblings or friends for a loan. These options are valid if you’re stuck, but you can also try some other approaches.
Start by asking the company you owe money to for a payment break or delay. Let them know you’re a bit stuck this month and agree on a payment term you can reasonably manage. When you’ve done this, you might be able to take on extra hours or a second job to help cover the extra monies owed. You could even sell some of your items to raise a little of the cash that you need. Once you’ve cleared what you owe, you could start to make changes that will help you avoid getting caught out again.
Avoid Getting Caught Out Again
To make sure you’re never caught short again, start to plan your spend more effectively. This could involve making a few lifestyle changes to ensure you are living within your means. You might even change jobs to earn more money or move to a new apartment that costs you less money. Having a few dollars left over at the end of the month is the ideal situation for you. These can be popped into a savings fund for that next big purchase, or you might have a treat to celebrate a financially successful month!
Prepare A Budget (And Stick To It)
Budgeting carefully, and sticking to it, is challenging and time-consuming to set up, but really helpful if you want to avoid overspending. Go through at least three months of bank statements and receipts to see what you spend. Make sure your accommodation costs, travel costs, vacations, energy bills, clothing and everything else is in there. Add it all up then put the items you really shouldn’t have bought into a separate column. Everything else should be less than you earn each month. What’s leftover?
Find out what you spend on your energy bills and services each month. Put that away in a savings pot, so you always have the cash up front to pay for any bills that come in. You can do the same for all your car costs, your typical vacation costs, clothing and salon bills too. Have that cash aside ready to spend when it’s needed. Make sure you have a reasonable allowance for going out, socializing, and health services. And you’ll need to do the same for your grocery shopping each month too. Finally, create a pot for an emergency fund. This will soon grow if you leave it untouched and will be available should something out of the ordinary arise like a broken down boiler or burst pipe.
If you can create a spreadsheet that details all the things you need to pay for in a year, you can plan ahead to make sure those funds are readily available. You will also need to include all your current financial commitments like loans, credit card repayments, mortgages and student debts. Your insurances will also need to be on there. Find out when each of these things are due for renewals and make sure you shop around for the best deal to suit you.
Save, Save, Save
Whatever is left after you’ve created your budget could also go into a savings fund. You might prefer it to be an easy access saver account so you can dip in as you need to. Or it might be a high-interest account to save up to buy a new car, a vacation of a lifetime, or even starting a family. Furthering your education, or moving house for a new job can also be quite costly. Having plenty put away for these occasions reduces the need for borrowing or going without.
Of course, hoarding your money and living frugally isn’t always a lot of fun. You need to live a little too.
Spend (A Little)
To ensure your credit rating is good, make sure you clear outstanding loans and debts as per your contract terms. Phone contracts and energy bills can also end up on your credit reports so be wary of skipping bill payments. Of course, if you pay everything off and never take any credit again, this can become problematic for you. You want to show you’re a good payer. To do that, you might need to have some sort of current credit record. Don’t be put off spending your money if you make a mistake. Instead, make sure you’re aware what it’s going to cost you later on. You’ve worked hard for your income, so try to have a little of it put aside for fun!