Is It Time To Be Realistic About Your Finances?

There comes a time in our lives where we stop being so carefree and start to take on the realities that are life. We may have moved on from living with parents, have our own place,  renting or planning to buy, and have bills to pay. It can be little too much at first when you hit the real world. Parents take great care of us as children, and we don’t realize at the time that there are potentially money worries and bills that need to be paid on time. However, if you find yourself at this point ready to take on your new role as an adult, then you may be wondering how you can be a little more realistic about your financial position? Nobody wants to live the struggle life, so here are a few tips to help you become financially savvy.

It’s time to work out your expenses

First of all, you need to have a better understanding of what your outgoings are, and how that works out against what you have coming in. It may be painful to look at, but you never want think that you have more money than you actually have, so get real with yourself. To get the best and most accurate idea, take the last three months bank statements. Highlight all expenses and list the regular expenses such as your automated payments and total them up. Deduct your monthly expenses from your monthly income. What is left is your disposable income, that can be used for food, going out and enjoying yourself and also savings. You may find that it might not be as bad as you thought. However, having this accurate and clear understanding will help you be in control of the situation moving forward.

Is It Time To Be Realistic About Your Finances?

Don’t bury your head when it comes to debts

The hardest thing to confront is debt. Looking at your credit card statements or student loan balance and can be terrifying to look at, but you have to face it eventually. You might as well confront it when you’re trying to take control instead of when the collections agencies are blowing up your phone. A lot of people bury their heads in the sand when it comes to debt, and are happy to make those minimum payments while racking up more debt. And some people are simply living the overdraft life. Turn that overdraft protection off! The bank is seriously getting rich off those fees and those fees are eating into your disposable income! If you want to move forward financially then you will need to attack those debts and start by paying more than the minimum payment.

One way to knock out credit card debt would be to consider balance transferring any debts on cards to lower interest rate ones or even zero interest options. You may need to look online to help you choose which one might be more suitable. Some people like to pay off their debts by consolidating with a loan. There are many ways to take control of your debts, the internet is your best resource for financial help especially if you can’t afford a financial advisor. Dave Ramsey is one of my favorites, I don’t agree with everything he suggests, but he gives you the no-nonsense approach to getting control of your finances.

Stop being loyal to providers

The next thing to consider would be where your money goes when it comes to the utilities and bills you pay for your home. You will have energy and water bills, insurance policies, and internet or cable bills, but are you getting the best deal on those things? Many companies save their best deals for new customers so you may find that you are not getting the best deal once you are six months to a year into the deal. Make sure you’re always watching the deals, and switch when you see there is a saving to be made. Also, think about the things you can cut out, like cable or subscriptions you don’t use. 

Change your habits

Maybe it’s time to start thinking about your habits. Now that you live on your own and have your own commitments and bills, your priorities have changed. Of corse, you can stay in more, and enjoy your home on the weekends, but habits can also be altered in others ways. You can save money when it comes to energy usage, for example, turning lights and appliances off when you no longer need them. Your habits might change when it comes to spending, such as deciding to not eat take out every other day and choosing to be careful with how much you spend on things that aren’t necessities. Cut down the cost of groceries by meal planning and prepping. Write a list of what you need instead of just buying what you want, check over the list multiple times and make cuts. There are so many ways you can save a little coin each month.

Is It Time To Be Realistic About Your Finances?

What are your financial goals?

Alright, now that you know your expenses, income, and disposable income, now it’s time to determine your goals. Sure, the future can seem a little far off to be thinking of things like retirement, but as we all know, time is flying by. It is time to have some financial goals, and these can be personal to you, big or small. It may be that you rent now, but you want to own your home. That goal could mean that you want to make saving your priority, so you can save up for a deposit. Your goal may be to save for holidays, it might be to pay for a wedding in the future, or simply you just want to start saving for your retirement. It is never too early to do that. Having your financial goals in mind and regularly reminding yourself of them means that you will start to make decisions towards them. You will notice that your habits are changing and it’s easier than you thought. You will be able to make sacrifices for things without giving it a second thought.

Adulting isn’t always going to be easy, and your finances are certainly not something that is a whirlwind of fun, but once you have things in place, you can start to see that you are in control of your life and your future. If you all would like to see how budget, comment below!

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