Avoiding Financial Trouble: 8 Tips

Making a new year’s resolution about sorting out your finances and not following through is a shot in the foot for you and your future. We’re almost halfway through the year so ask yourself if you followed through on your promises to become more financially independent this year? Or is your budget spreadsheet still a mish-mash of numbers? If yes, the following is a list of pragmatic tips that you can implement today to avoid financial difficulty.

Increase Your Worth by Going Back to School

Everyone has that ceiling in their career path that can be reached and once it is hit, they need to go back to school to do a postgraduate degree or to complete an additional qualification in order to go for the next promotion or job opportunity. Take the time to invest in yourself and your career by thinking outside the box and approaching private lenders to pay for going back to college so you can afford your student loans. It might be an upfront cost but your career (and your bank balance) will thank you for it in the long run. 

Budget and Be Realistic

When you are setting up your budget you need to be taking into account all of your income and all of your expenditure to make sure that you can set up your budget effectively. That includes any gaming or TV subscriptions, that takeout you buy for yourself on a Saturday night, and the extra bottle of wine you got when doing your grocery shopping. This also means you can treat yourself to any one of those things when you have money leftover – but only once you get to the end of the period you are budgeting for. 

Don’t Impulse Buy Because It’s on Special Offer

You are grocery shopping and you see the ice cream that you love is on special offer. You haven’t budgeted for it and it’s not on your shopping list but you pick up two tubs anyway. It’s called impulse buying and it happens to us all. You cannot leave the store without the ice cream because this is how physical marketing in stores work. Advertisers entice you into buying something you don’t need for an additional cost you can’t afford. Be mindful of that when you next go into a supermarket or clothing store and you will see just how many times companies try to sell you things that you know are not necessary but you can’t help but want. It makes it all the sweeter when you look at them and say “no”. 

Get Medical Insurance If Possible

If you are unfortunate enough to live in a country where universal healthcare is not an option then making sure you are properly insured is definitely a stitch in time that could save you thousands. Even if you are a person who doesn’t suffer from any long-term health problems like a sore knee or a mental health problem like anxiety or depression, there is nothing to say that you can’t develop a sickness that requires you to have extensive conversations with medical professionals. Even if you do require medical intervention, being honest with your insurance provider means that the coverage you get is what is needed for your situation and means you won’t be left holding the bag should the worst happen. 

Only Use Credit Cards to Build Credit

This comes back to the old problem that you need to have so much ‘good credit’ to be seen as a worthwhile asset to the bank to take out a loan. You can get a credit card with a low balance and make one purchase a week, pay it off when you get home, and you can build your credit quite rapidly, but only use the credit card if it’s something you could afford to purchase anyway or you will end up indebting yourself further down the track. Purchasing the latest tech on credit is a great option if you can afford the repayments. 

Avoid Being a Guarantor 

With all the best intentions in the world, a friend could ask you to co-sign on a loan or be a guarantor for them. Then for whatever reason, they are unable to make payments and you are left with the loan company chasing you for the money. Having the trust to set up a guarantee with a friend is a huge deal and not one to be entered into lightly by any stretch of the imagination. If you have any doubts or misgivings whatsoever, you should be able to discuss this with the person directly to ensure that there is no miscommunication. 

Avoid Joint Obligations Generally

The great thing about being in a relationship is that you get twice the income to your household but that is not necessarily the best thing when you are trying to steer clear of financial troubles because, if you remember, when you take on a partner you also take on their debts. If you are saving for a deposit on a house, keep the funds in a separate savings account. If you have unequal wages, then it may mean that one can afford to separate out a bit more than the other. Similarly, a joint venture like a house where you are both paying off the same amounts will cause joint issues if one of the people in the partnership has issues. As a result, it’s best practice to try and work these things out separately until it’s something that you are both invested in long-term. 

Find Alternatives to Spending Money

This is our favorite tip on the list as it’s the most creative. Do you spend a lot of money on birthdays and at Christmas time? You can always find alternatives to spending money on expensive gifts. Why take someone out to a restaurant when you can make a picnic (and if the weather tries to ruin your fun you can always do it indoors); have a night in watching old films over a glass of wine rather than going to an expensive wine bar; or, the classic, making a card from scratch with odds and ends around the house rather than purchasing one from a retail outlet. They are creative, expressive, and, best of all, budget-conscious alternatives to spending money on expensive things you don’t need.