If one wishes for a well-functioning family life, it is essential to have a healthy and strong personal economy. If the finances do not add up, it becomes difficult to make things work, which can create undesirable problems in family life.
It is certainly not easy to achieve a good economy if one is already under financial pressure. If your expenses are too high, or if you are, for example, a student with a maximum limit on how much you can earn, it can be challenging to maintain the family life you dream of.
Below, we look at what many families choose to do when finances become tight. However, we must immediately emphasize that we do not recommend either installment payments or quick loans, which are discussed below. Instead, we want to talk about them to shed light on the issues that can arise if one chooses to take advantage of these options.
Installment payments are not always the way forward
Although it sounds great to be able to buy an item on installment, it is rarely as good as it is described. Sure, you are allowed to pay in installments, so you don’t have to take all the money out of your pocket at once. However, you must remember to consider that you typically pay both fees and interest. It is, therefore, a type of loan you are taking out.
Installment payments for families with children can be a necessity. However, it is important to be prepared for the fact that the given item will end up costing more than the original price. This is due to the aforementioned fees and possible interest. Therefore, be careful about buying on installment if it is not necessary.
A quick loan is not the answer to your financial problems
In recent years, there has been significant advertising for quick loans. Everything from bus and TV ads to influencers talking positively about the so-called quick and consumer loans. The same applies to these types of loans – one should under no circumstances take them out unless one is financially strong enough to pay the loans back. Otherwise, it can end up being a very expensive affair that is hard to escape from.
Unfortunately, many families end up in significant financial difficulties as a result of these loans. They are marketed as the answer to all financial problems, but this is far from the truth. If you do not repay your loan on time, large fees and interest expenses will immediately accrue on the loan. In this way, the loan becomes even more expensive than what you initially expected it to be.
Save money regularly
One of the best ways to improve your personal economy is by saving. You probably have some expenses at the moment that are not really necessary. If you start cutting these out, you will already have more money available.
If you have something you want to buy right now but do not have the money for it, we recommend saving up for it. This may sound like quite a boring piece of advice, and it might be. But it ensures that you do not end up in a vicious cycle of fees and high interest rates.
We recommend creating a spreadsheet where you can regularly enter the amounts you are saving up. This serves as a form of motivation so you can keep yourself on track to save.
Get an overview of your personal economy with a budget
In order to save money in the best possible way, it is important to have a clear overview of your personal finances. Without an overview, it can be difficult to know where to save money.
But how do you create a financial overview? A budget is the answer. You need to make sure to create a realistic budget that you can base your financial planning on. You can easily create a budget in a spreadsheet such as Microsoft Excel or Google Sheets. The latter is a free spreadsheet that you can access online.
It is important that you have control over the following figures before you sit down to create your budget:
- Your monthly income: This is the income that lands in your bank account each month. This could be salary, child benefits, social assistance, or student grants.
- Your fixed monthly expenses: These are the expenses that you pay each month and that you already know the amounts for. Examples include rent and subscriptions.
- Your variable expenses: This is a bit trickier. Here, you need to come up with a realistic estimate of what you spend on, for example, nights out or café visits. Feel free to aim a little higher so you do not overestimate your personal finances.
If you have the above figures, you are ready to create a simple budget. From this budget, you will be able to see what your disposable income is each month. Additionally, you can play around with the numbers yourself.
