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Simple steps to financial controlMonday 17th October 2016
A shocking one in eight people will get into serious financial difficulty in their lifetimes* but there are simple steps to financial control.
There are many reasons why you might end up in financial difficulty but by far the most common is through not knowing what your income and expenditure is each month.
It’s not rocket science: to be in financial control you need to know what money is coming in from all sources each month, how much is going out and what it is being spent on. Having this detail will help put you back in control.
Getting this information takes a little time but is worth the effort. It means going through all your income and spending in detail – breaking it down into categories such as basic expenditure (food, toiletries, travel-to-work costs etc), liabilities (regular payments eg mortgage, utility bills, credit cards, mobile phone), savings (for annual expenses as well as the nice things), and non-essential expenditure (what you want rather than need).
Deciding if something is a basic expense or non-essential is one of the most important skills to develop. Ask yourself: do I desire it or do I require it? Using the budget planner that develops as you identify your spending habits you will be able to decide whether a non-essential expenditure is actually affordable.
But financial stability doesn’t necessarily mean being debt free – however, you do need to understand the debt. Whether it is a mortgage, loan, credit card or phone contract, it means understanding the cost of servicing it, the impact and duration of that cost, and the consequences of missing a payment.
Financial decisions today will affect tomorrow. Take these simple steps and your future self will thank you.
*(Source: Debtcred/The Money Charity).
A version of this article originally appeared in the Isle of Wight County Press, Friday 14th October 2016