Did you know that half of all Canadians are not secure about their finances? Taking care of your own personal finances is hard enough, but when it comes to family finances, things can get even harder. Many families have a hard time balancing the prices of various things such as bills, food, housing, and so on.
If you find that you’re often in debt and have a hard time getting out of it, you might need to rethink your money management strategies. The strategies you currently have might actually be doing more harm than good when it comes to the concept of saving money. But where should you start?
How can you make sure that you’ll finally start building wealth? Keep reading and learn more about the common problems that people have when it comes to saving money.
Why Do So Many People End up in Debt and What Can You Do?
People end up in debt for various reasons, but there are a few underlying factors. For example, you might end up having to deal with an expensive emergency or unexpected event in your life such as a car accident. If you don’t have any money saved up for emergencies, you will quickly find yourself in debt because you didn’t have a financial safety net to fall back on.
Once you’re in debt, it can be very difficult to get back out. This might be because your job doesn’t pay you enough. Maybe you can only pay the minimum payments on your bills because you have to focus on other expenses such as food and housing.
When you are forced to pay the minimum payments on your bills, you will find that you won’t be able to get anywhere fast. This is especially true if you have many different bills to deal with. Which ones should you pay first?
Is it better to pay off certain bills first instead of others? Or should you try to pay a little bit of all of your bills at one time? If you don’t have a lot of money to work with and don’t have a firm grip on your household finances, all of these questions can end up causing a lot of stress.
Some people get so stressed about their finances that they prefer to ignore the truth altogether. While ignoring your debt might be easier than facing it, it certainly is not a good idea. Ignoring your debt will not make it any better and, in fact, it is likely to only get worse.
So, what should you do if you want to organize your finances and become financially confident? The first step you should take is starting a budget.
Create a Budget
Budgeting is one of the most basic steps when it comes to organizing family finances. And yet, most people don’t have a budget planned out. Or rather, they have a budget but they aren’t very good at sticking with it.
If this sounds like you, you will need to seriously rethink your budget and what a budget means. To have a budget means to allow yourself to spend a certain amount of money every month or every week. When you do this, you will be able to start saving money because you won’t be spending more than you can afford every month.
The problem that many people make when it comes to budgeting is that they don’t really consider the specific numbers. They might say, “I’ll set myself a budget for $4,000 or $5,000 this month.” Because the budget isn’t specific, the person will feel like he will have more room to spend than he actually does.
This will not help you organize your finances and it will not help you become any more financially secure. Another mistake that people make is that they don’t actually keep track of what they’re spending. They might count their rent, the food they spend, the money for their child’s clothes, but they might forget about the smaller things.
They might forget about the phone bill or the cost to replace a nozzle on the sink. It might not seem that these small things will make a dent in your budget, but after a month, you will see that they can add up and take out a significant chunk. By counting everything you spend, even if it is very small, you will be able to become much better at budgeting.
From there, you can improve on other financial aspects as well.
Don’t Forget to Pay Your Bills on Time
As mentioned before, many people prefer to ignore their finances rather than take financial planning into their own hands. This is always a bad idea. If you ignore your finances, you won’t be able to keep track of how much money you’re spending.
If you don’t know how much money you’re spending, you might be spending hundreds or even thousands of dollars more than what you can afford for that month. The result is that you will be in worse debt than you were before. When the time comes to check your finances again, you may be so disillusioned with the result that you may give up on your finances altogether.
If you find yourself trying to ignore your finances such as your bills, you will have to stop right away if you want to get on top of things. Otherwise, things will only get worse and it will become much harder to fix. Bills are one thing that you should never ignore, no matter how stressed you might be about your finances.
If you forget about your finances and let them go past the date they are due, you will be digging yourself a bigger hole in your finances. A good way to immediately get organized is to pay off your bills as soon as you get them. This may be difficult, especially if you don’t have a lot of money to spend, but it is important nonetheless.
You will find that by paying off your bills as soon as possible, you won’t have that weight on your shoulders. You won’t have to keep remembering to pay the bills because they will already be done with. It will also give you the feeling of responsibility and organization that can help motivate you to conquer your finances.
Destroy Any Old Financial Records You Don’t Need Anymore
Many people tend to hold onto the physical copies of bills and other financial records. They might still have a big, bulky filing cabinet full of old bills and records that never see the light of day. While it may feel like a responsible and organized thing to do to keep all of those physical records, there is often no use for keeping them.
In today’s modern age, most of everything is online. This includes your bills. You can pay most, if not all, of your bills online without having to deal with stacks of paper. This is much more convenient than having to file through your filing cabinet in an attempt to organize a bunch of paper.
Besides being able to pay your bills online, most of your financial records should be online as well. The websites you use for your finances and bills should have a history of your payments. For that reason, most of your physical files are essentially useless.
Even if you have your files in perfect alphabetical order, you don’t need them anymore and they’re just taking up space. More than that, keeping physical financial records might be a bad idea since they can cause a security breach if anyone else finds them. But what should you do with all your old financial papers?
You should never throw them straight in the trash. As mentioned before, there could be security concerns if people find them later on. For that reason, you will want to destroy your records completely.
A good way to do this is to shred your documents. A professional shredder is ideal for this because it will be able to tear your documents into tiny pieces that no one will be able to put together again.
Everything You Need to Know About Organizing Family Finances
Organizing your family finances can be difficult at first, but once you start to get the hang of it, it will become easier over time. You will have the make the leap to stop ignoring your finances and start taking control of your budget. You will also need to pay your bills on time and keep them from going past their due dates.
By doing all this, you should be able to improve your finances in no time. To learn more, contact us here.