Feeling overwhelmed by finances? Time to grab a pen
Are you currently feeling totally overwhelmed by your financial situation? Don’t have a clue what you have coming in compared to what is going out? When you feel like this and the pressures of life start to pile up it can be very difficult to face up to the situation and it can instead be tempting to just try and ignore it. As time passes though things can quickly get worse and even out of control. If this sounds like your life at the minute then the most important thing you can do is to grab a pen and paper, flick the kettle on and start trying to make some sense of things.
Write down everything you have coming in
You may know how much money you get from your monthly pay packet but what about any other sources of income, child benefit, Tax credits or other benefits for example? Have you ever taken the time to sit down and add up every single penny you have coming in on a monthly basis? Doing so can be the first step to understanding your true financial position. What is the second step?
Write down your regular outgoings
Listing all of your regular outgoings like standing orders, bills, direct debits, rent or mortgage payments and your weekly food spend is the second step to understanding what is going on with your money. By adding up all of these regular outgoings and then deducting the final figure from your regular income figure, you will be able to see exactly how much disposable income you should have left to spend each month.
One other thing that can be helpful is to then split all of these outgoings into separate sections. You may have a section for utilities, one for debt repayments, one for insurances and perhaps even one for extra luxuries that you could possibly do without. If you have a debt repayments column you could also list these by order of priority when it comes to getting them paid off. Some credit cards may carry a higher rate of interest than others for example or if you’ve been struggling to pay them, some may be further behind than others. You can also think about switching some of your insurances or utilities to find a better value deal.
Write down everything you spend on a daily basis
Now this really can be an eye opener. We wrote a post about these insignificant spends in the past and how they can add up over the course of a week. I’m talking about that coffee from Starbucks, that dinner time sandwich, even parking fees. Writing down everything you spend – and I mean EVERYTHING – can give you important insights as to where you’re wasting money.
It’s amazing the perspective that can be gained from simply writing down all of your income and outgoings. As we said earlier, you may discover that you have some outgoings that could be considered as luxuries rather than necessities and you may feel that you need to eliminate some of these. You may also find that you simply don’t have enough income to cover your outgoings, at which point you might want to consider a second job or building up some sort of side-line income. Finally, you could find areas where you can make adjustments to – or even create for the first time – a budget that will help your finances to recover.
It could be painful to face up to the facts but at least you won’t have your head buried in the sand anymore. You’ll have a good overall understanding of where you are at financially and you’ll be armed with the knowledge to do something about it, rather than spending every waking hour just worrying about it.
Have you ever benefited from simply listing your finances down on a piece of paper or a spread sheet?