To avoid financial problems and money management difficulties, you need mechanisms that help you control your spending. People sometimes get in trouble because they don’t know where their money is going. You can list of all your income and expenses and find ways to increase your income and reduce your expenses. Avoid spending for luxury items and other unnecessary things. If you have money set aside for emergencies, it can help you avoid more debt in the future.
Start paying yourself first. Develop a process that allows you to save money automatically. You can save money in a 401k with automatic deductions from your paycheck. Automatic deductions can also be taken out to start an emergency fund. This money can be used for car repairs and minor emergencies. Just about everyone uses credit cards for one thing or another, but when you have an emergency fund it helps reduce your credit card usage.
Get a budget worksheet and list all sources of income. A worksheet can be found on the National Foundation for Credit Counseling website. List your income after taxes have been taken out. Income can come from a variety of sources including wages, Social Security, interest, rental income or retirement income. There are eight different income sources you can fill in. The total will be calculated automatically.
Make a list of fixed expenses and enter them into the budget worksheet. Fixed expenses are those you incur regularly, such as mortgage payments, rent, Internet service, auto insurance and garbage collection fees. Some of these expenses remain the same while others vary. For those that vary, enter a monthly average. The budget worksheet will automatically calculate your total fixed expenses.
Compile a list of variable expenses and enter them into the budget worksheet. Some variable expenses will include credit card payments, clothing, laundry, transportation, lunches, pet care, cosmetics and entertainment. Variable expenses will change from month to month.
Review your total monthly net. At the bottom of your budget worksheet you will see the total monthly net figure. If this figure is positive, it means you earn more than you spend. When this figure is negative, it means you are spending more than you are earning. If it is negative, the total monthly net figure will be displayed in bright red and preceded by a negative sign.
Increase your income. Try to find ways to increase your income. You may want to work an extra part-time job or work overtime. If you receive any bonus, tax return or incentive, pay toss it into your savings account or pay down credit card debt. Sell unwanted possession on e-bay. Another way to generate cash is by having a yard sale, according to the Better Business Bureau website. Reduce your expenditures. You may be able to eliminate or cut back on some of your entertainment costs.
Contact consumer credit counseling services. You can speak with a certified trained counselor who will provide you with tips and techniques to save money, eliminate debt and avoid financial problems in the future, according to the Better Business Bureau. This can be done, with no obligation on your part to enter the bureau's program.