There are many ways to obtain a little extra cash when it is most needed, from log book loans and second mortgages to working freelance, to much more unlikely scenarios, such as winning the lottery! It’s always better to try and save cash than hope for the lottery windfall. Here’s five of the most useful ways to ensure there is money there when you most need some:
Budget! It’s surprising how many people let budgeting pass them by, even if they are mentally sold on the idea. Once you’ve overcome the remarkably large hurdle of actually sitting down with pen and paper, the basic concept is simple: track what you earn and make sure your expenses don’t outpace your earnings. The very first time you carry out this exercise, you’ll be surprised at how many “little expenses” add up. Often, you’re surprised by some of the numbers. Your energy bills might be higher than you’d expected, or gasoline for the car is more than you’d thought. Once you create a plan to bring those demands under control, you’re well on the way to making tangible savings.
Put savings first. Too many people think they can’t save because “there’s not enough money left over at the end of the month”. This is putting the cart before the horse. Spending nearly ALWAYS expands to eat away whatever amount is in your bank account, so it’s vital to decide how much you wish to save before beginning to spend, spend, spend. Typically, it’s a good idea to set aside a minimum of 5-10% every month for savings, either consciously, or by directing your bank to automatically siphon off the sum into a separate savings account. Once that is done, then you can apply the remainder of your income to your budget!
Cut your energy bills. A major household expenditure is gas and electricity. Fortunately, with many different providers out there, it’s reasonably simple to go online and change suppliers – after first using price comparison sites to find out whose offering the cheapest tariffs. Be sure to repeat the exercise every few months to take advantage of market competition.
Pay down your debts. Debts are the single biggest drag on personal finance, and eliminating them is a massive step on the road to saving. When resolving to pay off debts, start with those commanding the largest interest rates – and remember: these are not necessarily the largest debts. Credit cards generally come with relatively hefty interest rates, so they are an excellent place to start, but all personal circumstances are different, so list your debts and their attached interest rates from highest to lowest, to see where the axe should fall first. Some people start with the lowest balance and work from there (Dave Ramsey’s “snowball” method). This has been proven to help people psychologically pay down debt, but may cost you more in interest over time.
Watch how you shop. Make an “audit” of your next trip to buy groceries by studying the till receipt. Strike off the ready meals and processed foods and resolve instead to get your fruit and veg at the market. The ingredients are much cheaper there, and with the help of easy and quick online recipes you’ll soon be eating more healthily – and saving a remarkable amount every month into the bargain!
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Joe is a former financial advisor and media representative for American Express and Ameriprise. He was the “Money Man” at Detroit television WXYZ-TV, appearing twice weekly. He’s also appeared in Bride, Best Life, and Child magazines, the Los Angeles Times, Chicago Sun-Times, Detroit News and Baltimore Sun newspapers and numerous other media outlets. Joe holds B.A Degrees from The Citadel and Michigan State University.
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