Money Management

Money Management

Everyone manages their money in different ways and to different degrees. For some people it is an easy task and for others it can be very challenging. It is important to manage money because poor financial planning can result in bad credit that can affect your finances for years. Money can be the cause of many arguments and stresses, however we can all follow some basic guidelines to help us manage our money more efffectively and avoid pitfalls of poor credit.

A major problem for many people is obtaining money in the first place. The key to earning money is through hard work. The key to having money at the right time is knowing that there is a limit on your income and budgeting for the future. These two keys should be taught to people from a young age.

As an example, my parents used to give me my own child benefit once a month. In fact, they didn't give it to me in cash, they had it paid directly into a bank account that we opened for me. At the time I think it was around £50 a month - sounds a lot for a teenage nearly 20 years ago, but with that money I used to have to buy all my own clothes, sweets, magazines, pay for any cinema trips with my friends etc. I soon learned that if I didn't think about saving money to spend next week, if I spent all the money on clothes and sweets, I would miss out on things that my friends were doing.

Now, you may react differently to this:-

You may think that you cannot afford to pay your kids their child benefit because that pays your bills.
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Children who don't understand money management will always ask you for more money and likely have financial problems of their own when they are older.

You may think that you cannot save for the future because you need all your money now.
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How are you going to survive in the future if you retire without an income? You need to reassess your finances, make a budget and look to see where you can save money (e.g. choose one credit card and pay off the full balance monthly saving your interest costs), see how you can reduce your utility bills (sometimes just changing provider can mean more money stays in your pocket).

You may even think that there is no reason to budget for emergencies because you can just apply for a loan
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What if you loose your income altogether and lenders will not lend to you? It is cheaper to save money than to borrow money i.e. saving £100 per month will mean you have £1200 (plus interest) saved by the end of the year; repaying £100 per month off a loan will mean you reduce your loan capital by less than £1200 in a year because of the interest charged. Loans can be a solution to some money shortages but they can also be a false economy.

Tenant loans, just as any other loan, are helpful to some people to improve their finances and assist in money management, for example when consolidating debts to reduce monthly outgoings and reduce interest rate payments. When the solution to improving your finances is to take out a loan, then it is very important to make sure that you know exactly what you are committing yourself to.

The more you can put yourself in control of your own finances the better your financial future will be. People who can work within their budget will be more prosperous than people who cannot live within their budget.