In these difficult times, managing resources can be extremely difficult. The money we have is usually insufficient. This has forced many people into borrowing money, and having debts piled up. How can you meet the challenge successfully? Is it even possible to totally stay out of debt? Financial experts say that the answer has to do with having a sense of where the money is coming from and where it is going as well as with being willing to make informed decisions. To do this, you need a budget. Let’s see what can be done.
Budgeting
Budgeting involves making a list of income and a list of expenses and then keeping the expenses within the income. You begin by making a list of your income. Do not count on income that is uncertain, such as that overtime pay, bonuses, or gifts. Financial consultants warn that planning on uncertain sources of income can get you into debt. Recording everything you spend will help you locate any ‘mystery money’ that seems to slip away. Balancing a budget is more than making a list of income and expenses. It involves keeping expenses within income, which may call for cutting back on your spending. Avoiding impulse spending!
Stick to a Savings Routine
Try to develop the habit of saving money. Automating your savings strategy makes it easier to build a solid emergency fund, and to set aside money for other goals. Even if you do not make a lot of money, if you save 5 thousand nairas every month for instance, at the end of the year it can help you solve a problem that would’ve caused you to go borrowing.
Only Borrow When Necessarily
Borrowing in itself is not bad. Even the most advanced countries have debt. Borrowing irresponsibly is the problem. Taking money with interest for things you can live without, things you do not need. Debt should be segregated into two types: revenue-generating and non-revenue generating. Debt taken on to buy an asset that helps generate revenue for a long time is classified as good debt. Conversely, a loan/debt procured against an asset that doesn’t generate revenue can be considered bad debt.
Avoid Credit Scams
Always be aware of scammers and potential threats of phishing. Credit card numbers and other sensitive information related to the credit card should never be provided over the phone or through text messages. Credit card scammers usually pose as new service issuers or providers of lucrative business offers while tricking the unsuspecting user into leaking sensitive information about their credit cards. When this happens you now start paying a debt you didn’t plan for. And you could get into a debt trap.
Getting out of any debt trap can be both stressful and strenuous. To avoid falling into a debt trap, it is crucial to plan for current and future financial needs. Budget, save, avoid impulse buying, beware of credit scams, and live within your means. You’ll be fine.
