Finances can sometimes seem easy. Make money, spend some of it, save what is leftover, done. The reality of finances only starts to hit you when reality bites. If your washing machine breaks down, your car breaks down and your husband needs to get a wisdom tooth out in the same month you will truly learn how to finance. That is what happened to one woman recently. She felt they had full control of finances until her husband required shoulder surgery leaving them in $10,000 worth of debt.
They had to address their spending habits dramatically to curtail the debt. In the end, they managed to pay off the lump sum within 8 months. The husband’s six-figure salary was a huge help but the couple says that proper budgeting was the key to their success.
The key mantra the couple describes is “Know where your money is going”. They followed a simple formula for figuring out their finances. They first looked at all the money coming in, then they looked at recurring expenses, both necessary (mortgage, electricity) and discretionary (gym membership). After this they were left with the money they had to play with every month, this could be used for savings, eating out, going to the cinema or something else.
The couple then allocated accounts for each item of spending. When they were approaching their limit in a particular category they stopped spending, allowing them to hit their savings targets each month. This requires a lot of discipline but with proper planning, it really can be easy. Modern online banking makes it so much easier as well as they generally allow you to segment your account into a number of smaller accounts and set up whatever kind of alerts you like.
If this is something that interests you than starting looking into online budgeting applications or talk to your local bank. The options are all out there and waiting to be explored.