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Do you find going through the budget wondering where you going to get the money to pay the next bill? I think we have all been there in our lifetimes or you are currently experiencing that stress. My solution is both short and a long term plan. However, if you are willing to stick to the plan, you’ll probably only review your budget once a year to keep it slim and trim. This process will not happen overnight, but will definitely assist you in the long run. Set yourself financial goals, this will keep you focused on the road ahead, and give you the drive to follow through.

1. Before you even start trying to save money. You will need a starting point. You will need to pull an actual statement from your bank and possibly keep your receipts that you have through the month so you can document your budget appropriately. If you do not have all your facts on hand, this process will not work efficiently for you. If you do not have your receipt information, try documenting all possible expenditure that you know of.

2. Once you have completed your monthly budget, try to expand this budget over the next year. Taking into consideration your possible expenses or income increases. This will give you an excellent overall perspective of where you would be financially within a years’ time to assist you paying off debt.

3. Take a hard look at your budget and try analyzing what is necessary expenditure and what is unnecessary. For example, anything you would require to keep your household running would be a necessary expenditure. Anything outside of necessary budget requirements must be carefully considered if this is necessary. Separate the unnecessary expenditure from the necessary expenditure.

4. Once you have eliminated the possibilities of removing unnecessary expenditure, put this into action. Contact the relevant companies or persons and find out if you can cancel your monetary commitments to them. If there are penalties involved, ensure you ask these questions and take into consideration the implications.

5. If you have policies (excluding retirement annuities / endowments), call alternative insurance companies to ensure you are getting the best policy for the price you are paying. A tip here is never to tell insurance companies what you are currently paying as they will use this as a benchmark. If you are calling about your vehicle insurance, ALWAYS ensure your excess is affordable and you will have the excess on hand if required.

6. Another expenditure I find draining is contracts, try keep to month to month contracts. Most long term contracts have penalties involved if you would like to cancel. Contracts leave you tied up for months on expenditure you found to be wonderful at the time, but ended up a temporary solution for that period.

7. Once you have executed your plan on above items, have a look at if you can reduce your current necessary expenses. A few examples include electricity, water, food and petrol. Are there alternative solutions to saving money here? Could you catch a lift with someone to work? Could you cut out a luxury item that could save you? Perhaps switching off all your plugs at night before going to bed will save that bit extra or replacing dripping taps? If you could afford it, perhaps even looking at alternative energy to save in electricity costs?

8. Loans and debt is something else to look at, perhaps consolidating debt or looking for an alternative option with a loan that has less interest? Try not to buy on credit if you can, the fees are exorbitant and could cost you almost double than what the item is worth.

9. If you are currently renting a property, look around on the market to find out if your property is market related. If you are willing, looking at a smaller property for less rent might assist your monthly budget. Alternatively, invest in a home for yourself, this money that you invest will benefit you and not someone else in the long run. However, try to save a deposit beforehand as this is your only bargaining chip with the banks on interest rates.

10. Look at opportunities to generate you more income. This could be in the form of an alternative job with higher pay, or could simply be selling some of your old items you don’t use anymore. Perhaps you have space you could rent to someone for storage?

11. Re-evaluate your budget based on the previous steps outcome. Its really important at this stage to start building yourself a nest egg for those unforeseen expenses. Set yourself a goal and try save towards it.

12. Pay everything cash. If you pay cash you don’t have to worry about interest charges and fueling someone else’s pockets.

Budgeting is all about empowering yourself. Giving yourself the knowledge about your financial situation and turning around your life for the better. Don’t let anyone or anything stand in the way of your goals. I hope you find success on the road to financial freedom.

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