How To Manage Your Finances, Avoid Financial Debt

The troubles of financial debt is worrying and sometimes intimidating if you cannot be able to get out of it because you don’t have the solution at hand to immediately mitigate the problem.

How many people have lost sleep, restless and depressed because of debts and the pressure that comes along with it that others have lost their sanity and at worst committed suicide because they have lost hope and they don’ know what to do?

Well, to avoid these things happening we need to educate ourselves the importance of financial management. Do we have some sort of guidelines in our spending habits, financial planning and forecasting in place, why we have overshot our budget?

We need to educate ourselves about revenue, expenditure and budget and how important it is to balance your budget to avoid deficit. Revenue is the source of our financial income.

Expenditure is money spent in meeting our obligations while the budget is our controlling guideline to determine that our revenue and expenditures should always be balanced to avoid deficit which eventually can be translated into a financial debt.

If the discrepancy of your revenue and expenditures is so big, it’s now high time to review your spending patterns and why this is so? Have you been spending something unknowingly more than what you can afford? Have you applied at your advantage the basic philosophy of buying or spending by only buying things that you cannot live without?

These are basic things that you need to consider in closing the gap between your expenditures and revenue.

Remember that a financial secure budget is not all about expenses but also includes contingency which is a certain percentage of your income you have to set aside, your personal savings that you can possibly allocate or some small investment that you think can be a promising source of revenue in the future aside from your insurance, something that you can depend on during lean times and that of emergency.

The advantage of including these things in your budgetary framework is that you will be able to concentrate and focus only in your balancing of your budget and yet you can be assured of financial security in the future.

Each individual has its own unique budget though, a budget that does not meet the above criteria is either your income is insufficient or you’re living in a hand to mouth existence.

Budget in some ways reflect one’s lifestyle. To those with good income budgeting is not quite a problem but for marginal income earners, a personal budget is a must.

 

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