A great many people turn to consumer credit whatever their income, and so become prisoners of everyday debt. Often these same people imagine that a rise in salary would solve the problem and bring their spending under control.
Who is affected?
The first victims of this behaviour are young adults (under 30). They seem particularly careless with money. They tell themselves there is all the time in the world to think about saving later on.
The trouble with this way of doing things is that later on, it is already too late. Far better to start out on the right footing. People fall into the habit of spending without counting. Quite literally. And along the way they lose all sense of financial responsibility.
Here are a few tips for keeping a firmer hand on your finances.
Budget your spending
Budgeting your spending is one of the best ways to keep an eye on your money. Put like that it sounds obvious, but make sure you spend LESS than you earn.
Find a balance
There is no need to sacrifice life's little pleasures in order to become financially responsible. Simply find the right balance between the money you earn and the money you spend. That way you will not feel guilty. Just set aside a budget for your enjoyment and stick to it.
Build an emergency fund
You have probably heard of emergency funds before. This is the plan that lets you handle the unexpected (anything from a simple car breakdown to far more serious problems). To give you an idea of the amount you should keep permanently in reserve: 3 months' salary. Yes, it sounds ridiculous, but it is not. Make sure you put a little something aside every week (even 5 Dt) to feed that emergency fund. And then, of course, plan ahead: think about a savings scheme for later. It is important to start as early as possible.
Plan, plan, plan...
Once you have begun budgeting your spending, building an emergency fund and making sure you save, you will feel far more comfortable planning your spending. You decide which outlays you will take on, and in doing so you take control of your financial life.
Avoid debt as far as possible
We live in societies that urge us to spend without counting and to disregard the consequences. Resort to debt only in case of absolute necessity. Taking out a loan to buy a house or a car is, to some extent, akin to investment. Taking out a loan to go on holiday is akin to recklessness, since your holidays should, to some extent, form part of the planning you do day to day.
Try putting these tips into practice. Without kidding yourself. Without telling yourself that you cannot control everything. And see the difference for yourself.
In brief: the 5 tips for taking control of your spending
A recap of the five tips set out above, so you can take them in at a glance.
| Tip | Key action |
|---|---|
| Budget your spending | Spend less than you earn |
| Find a balance | Set aside a fun budget and stick to it |
| Build an emergency fund | Put money aside every week, aiming for 3 months' salary in reserve |
| Plan your spending | Decide in advance what you are going to spend |
| Avoid debt | Reserve credit for investments (house, car), never for holidays |
