If you’re working long, hard hours because you’re trying to increase your income but still struggling to make ends meet, it might be because you’re suffering from a common misperception: You’re assuming that earning more is the only way to pay your bills. Or you might be working long hours because you’re carrying credit card debt and don’t see a way out for yourself. Which is stressful to be sure.
Another idea is you can try to increase the money you have available each month to pay your bills by spending less. You don’t have to become a tightwad to increase how much money you have during the month; you just have to make wiser decisions about how much to spend on the things you frequently buy.
How to Manage Money Better?
In a nutshell, you can improve your cash flow through effective personal financial planning. When you control your money, you’ll increase your cash flow because you’ll be monitoring both your spending and your expenses.
You can manage your money better by repaying your debts more efficiently and by spending your money more sensibly.
How to Pay Off Your Credit Card Debt
We live in an era of easy credit. This is a double-edged sword. On one hand, you can buy the things that you want and need. But, on the other hand, many people are inclined to spend more than they earn. Over time, debt spirals out of control because you must pay more than the money you borrowed through various penalties such as late fees or high interest rates.
Debt occurs because your spending capacity exceeds your earning power. In fact, it doesn’t matter how much you earn — you can always spend more. Even the ultra-wealthy can lose their fortunes because they overspend.
One way to reverse this trend is to get a consolidation loan — White Mountain Partners can help you set up an effective debt repayment method with this kind of loan. The good thing is you’ll only pay one lender at one interest rate once a month. What’s more, the interest rate will be lower because they’ll base it on the weighted average interest rate. This is the grand total of the interest that you’re paying on all your debts. It’s calculated by estimating your total interest rates during a certain period and dividing it by the total amount of money you owe.
How to Improve Your Spending Habits
Financial planners classify spending into two buckets: necessities and luxuries. A necessity is something that is essential for your well-being, such as food, shelter, medicine, and transportation. A luxury is something that is not essential but that improves the quality of your life, such as a vacation, dining out, or buying the latest mobile device.
While you can’t simply limit yourself to only spending on necessities, unless you’re leaning toward an austere life, things can go awry when you borrow money to spend on luxuries
The wisest way to buy luxuries is to only spend money you’ve earned and not dispose of all your surplus funds.
How to Borrow Less Money
By not borrowing money—that is, not putting your purchases on your credit card—you won’t have to pay more than the cost of the product because you won’t be paying interest on them.
By not spending all your surplus income on luxuries, you’ll be able to put some money aside to buy assets that will provide a source of future income. For instance, buying a stock or taking a business course are assets because the stock will pay you dividends and the business course will boost your earning power.
Another way of improving your spending habits is to refrain from impulse spending on expensive things. There are at least three good reasons you should do some product research before spending a large chunk of money. First, the product may not be as good as advertised. Second, it may not be the most suitable product for what you need. Third, there may be an even better, lower-priced product available.
In conclusion, the better you manage your money, the more you will have available for the things you need. You can improve your financial situation by using an effective debt repayment plan and by buying a few assets rather than spending all your surplus income on liabilities.