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five steps that you can take in tough times

http;//www.moneymanagmentsecrets.blogspot.comThings are not the same in the world today, everything now seems to be going in the opposite direction. now its hard to find any good news about the e-economy: stock markets around the world are unravelling, home values have plummeted and increasing numbers of families are struggling with mortgages they cannot afford, retirements accounts are shriveling etc. grocery and utility bills are going through the roof, businesses are falling, and new layoff announcements seem to come nearly every day.

In this kind of economic situation what can you do ? with today"s economy in mind , here are the five ways one can manage your family account more effectively. These measures, if well implemented will help you very well.

1. prepare a budget : this is the first step that you should take when you want to achieve the above. when you create a budget for your house hold. it will help you see how you are actually using your money and where you need to make adjustments, if need be. to be able to do this, it involves five basic steps.
the first step is sitting down as a family and set some short term and long term goals, in terms of how you want to use your money and time. whats your top priority? is it sending your children to college ? saving for retirement ? etc. this will get you thinking about your financial habit. secondly, calculate your net house hold income for one month. thirdly, track your expenditure for a month . get a notebook and put a heading at the top of each page for different spending categories, such as housing, food, transportation, clothing medical etc. fourth, at the end of each month, total each spending category . do not forget to factor in annual or semi annual expenses such as property taxes or insurance premiums . calculate the cost per month of such bill. then add up all your expenses for a grand total and compare that to your net income for the month.
the last step - hopefully your expenditure for the month where more than your income. then your task is to prioritize this excess to the areas of your budget such as savings or paying extra on outstanding credit card debt.

2. live below your means : what this means is that you should cut down on your expenses. you can find many ways of saving money for the future. you start this by cutting down on some projects. projects that involve hiring someone should be avoided. moreover, you can turn down the heat in winter and the air conditioner in summer, to save on utilities. when you reduce your expenses , you will then be in a position to have more money to put in emergency savings. as a matter of fact , you can even get your children involved with this : you explain to them the serious issues that is happening in the economy and why they should be frugal in spending. you can ask them if they have their own ideas for saving money.

3. avoid buying on credit : you do not need to buy items like cars, clothing, furniture, boats and other luxury items on credit. do not borrow additional money. when you do , you will be adding to your debt load. it is good to avoid these because of the uncertainty of the world economy, which affects all the countries of the world. this is important, because if you are casualty of job, you do not want to have debt load to deal with too. if you become burdened down from a heavy load of debts, its as though you are slave to your creditors. if you you are short on cash, you need to find another way to get by than credit cards, as it is not advisable to use it. this is because of the high interest rates.

4. pay of existing debts : if you are in debt, try to pay off your existing debts, especially that of credit cards and other -high interest loans. if you have been able to reduce your house -hold expenses or even a few garage sales, you can then that extra cash towards debt reduction. you do this by paying whatever extra amount you can, in addition to your regular minimum debt payment on at least one outstanding debt.

5. save part of your income : you should try and save at least 10% of your income. when you do this, you will be able to be well prepared if an unexpected expenses like a major car or household repair comes up. you will not be able to turn to your credit cards . you should have separate savings accounts setup for long time goals [ such as your retirement or college for your children] and short term goals [ to pay for things like vacations, new appliances or car down payments]



This post first appeared on How To Manage Your Funds In This Depressing Time, please read the originial post: here

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