A Beginner's Guide to Personal Finance

By: Skye Ruf

Managing personal finance is a delicate issue at the best of times that requires the careful consideration of various factors. You have your basic salary which gives you a monthly or yearly injection of cash and then you have your direct debits - bills for your rent or mortgage, internet connection, water, gas, insurance, car, mobile phone credit etc. But it's far more complicated than all that even, there's your living costs including food, transport and petrol, holidays, leisure activities, Christmas presents; and more coming in too - loans, gifts for birthdays and holidays, bonuses, investments... it all gets rather hard to keep track of, but keep track of it you must if you're going to keep yourself afloat. Fortunately it's always possible to get help from a financial advisor, or a refinancing company that can pay off your debts with a single loan. However this often results in unnecessary cost on your part and will never account for all your different costs and profits.

Fortunately there are some simple tips you can utilise to make sure you manage to keep on top of your finance. The first and most important tip is to keep a note of everything you spend and receive in a day. This shouldn't take too long if you keep up to date with a cash book. It'll take about ten to twenty minutes every evening but at the same time it'll mean you know exactly what you're spending and how much is in your account. Similarly you should keep a note of when your credit cards need paying and which other direct debits are coming in and out each day. This way you're far less likely to bounce a payment or to spend money you can't afford, which will in turn mean that your credit rating stays healthy. If you get bad credit it will become very difficult to get loans or mortgages and only through the process of credit repair will you be able to win back the trust of the banks.

Another simple tip is to use different accounts for different lumps of money. For example, it's great to have an account for your debits and mortgages which should probably be the same account your monthly payments come into. Workout how much your loan repayments and debits come to a month and make sure there's always at least twice that in the account at all times. This again will prevent debits bouncing and a need for credit repair. If your total outgoings come to more than your total income then you know you need to find a loan. On the other hand if you have a lump of money that's large enough to pay off a year's worth of one debit or loan - for example a year's worth of rent - you can put that into one simple account and set up a direct debit to their, and this way you'll never have to worry about it and won't find yourself without a roof over your head. If you have lots of spare cash you can do this with all your debits keeping your income free to spend on daily activities.

Alternatively you can 'siphon' some of your profit off, for example ten percent which is then money that's free for you to spend as you wish without worrying about it damaging your overall money. Similarly you should siphon off some savings, again a percentage of your salary and maybe any gift money, which you can then use to gather interest or use on a rainy day to pay off credit cards etc. These are just some simple steps you can take to make your finance more manageable and keep your money under check.

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