Having bills and debt is a regular part of life. Most understand that to get things like houses and cars and to receive services like gas, electric, and water, they’re going to have to pay a cost.
The issue, however, comes when bills and debt are mishandled and essentially pile up. When everyday expenses reach the point that they’re more than what you can afford, it’s time to go back to the drawing board and get things in order.
Below are some tips on how to responsibly manage everyday expenses.
#1 Be Aware
You can’t manage what you’re not aware of. Therefore, the first step towards being more financially responsible is to become aware of what your expenses are.
Collect all of your household bills for the month to get a clearer picture of what you’re paying every month.
#2 Cut Back
Once you have your monthly bills in front of you, you’re ready to see where you can cut back. Creating two piles, one for necessities and one for desires or wants, place each of your bills into one of the piles.
Which expenses can you eliminate from the budget altogether? Do you have a higher than necessary cell phone bill because of an unlimited data plan?
Perhaps you like watching television, but could you look for an affordable alternative?
#3 Look for Better
Periodically it is a good idea to look for better options than those you have. While you may have gotten a decent deal on a mortgage when you bought your home, you may come to realize that there are better offers for a home mortgage out there now that you have improved credit.
The same goes for things like car insurance, health insurance, utility services, and more. Businesses are always looking for ways to keep customers happy and bring new ones through the door.
Meaning, there are a ton of opportunities you can take advantage of to cut costs and better manage your expenses.
#4 Assign Your Money
Now that you’ve been able to assess your monthly expenses, decipher which are needs and which are wants, and cut back you need to take a look at your income.
How much do you have coming in each week or month? How much of your income needs to be assigned to bills and expenses for the month? A budget allows you to delegate where your money goes and keep an accurate record of it.
Assigning caps on expenses for instance, like $400/month for groceries, ensures that you don’t go over the income you have coming in each pay period.
#5 Evaluate Periodically
Your finances are not something that you can afford to put on auto-pilot and never revisit again. As your life changes so will financial circumstances.
A new addition to the family, for instance, would increase your monthly expenses, a large debt like a student loan being paid off, means you have more income to put towards other expenses, while an increase in energy usage will cause your bill to go through the roof.
Periodic evaluation allows you to discern whether you need to make changes to your budget to match the changes in your life.
#6 Consider Earning
If in evaluating your finances compared to your expenses you realize that your bills far outweigh your income, you may need to consider avenues for earning more income.
Whether you earn passive income by completing surveys, writing reviews, and reading emails or you decide to try a side hustle like a part-time at home customer service agent or a blogger, the income can be put towards paying down your debt and balancing your expenses each month.
#7 Get Help
If managing your finances is not something that you’ve done regularly, you may find that in taking the above-mentioned steps that you’re in over your head.
If this is the case, the most responsible step you could take to getting back on track is to get help. Help may come in the form of a financial advisor, debt consolidation company, or bankruptcy attorney, but the sooner you do something about your current financial status the quicker you can get back on track.
It can take time to learn how to be responsible for managing your money. Sometimes, you don’t even realize you’re mismanaging it until you find yourself in serious financial trouble.
The best thing you can do is get a clear understanding of what your expenses are, find ways to cut back, and essentially create a budget and process that keeps you on target and out of the red.