How To Smooth The Peaks And Troughs In Your Personal Finances
Posted on August 19th, 2010 in Budgeting, Debt Assistance | No Comments »
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Despite that fact that many of us work a similar number of hours day-to-day and week-to-week and that our general living expenses can remain similar throughout much of the year many people still find that they experience “peaks and troughs” in their finances.
A peak might be receiving a bonus at work, having a birthday or selling some unwanted items on eBay where you end up with more money than you normally do in a particular month.
The troughs are far easier to identify. Christmas, with all the spending it involves, the extra power you normally use over winter with the colder weather and darker nights, vacations and months in which it seems half your family have a birthday can all result in there being “too much month left at the end of the money”.
Fortunately there are a number of tricks and techniques you can employ in the hope of smoothing out this financial boom and bust leading to a more sustained, predictable and enjoyable way of managing your money – all while avoiding that sense of dread every time you go to the ATM!
Recognize Expensive Months And Save For Them
Some months are going to be more expensive than others so accept that this is the case and try to put some money aside each month to help you cover these extra expenses. For example even a hundred dollars a month put into a savings account will make life a lot easier when Christmas rolls around or you want to book your summer vacation.
Overpay Bills When You Have The Money
When I have a “peak” month I like to try and overpay my bills. I send extra money to the utility companies, to my credit card company and my cell phone provider. By doing this my accounts get into credit which means future bills will be far smaller.
Of course I could just save the extra money to use on those bills in the future but I choose to overpay for two reasons. Firstly I then know this money is safely on my account rather than being a temptation sitting in my own bank account. Secondly there is something wonderful about receiving an electricity bill or phone bill to find that you’ve actually already paid it thanks to the credit on your account!
Put Money Away Where It Can’t Be Touched
Don’t just try to save money in your normal checking account. It will eventually get eaten through – often without you even realizing that it is happening. Instead get yourself a new savings account into which you place your extra cash so that you know it is safely locked away and won’t disappear without your knowledge.
Start A Piggy Bank For Your Loose Change
This is a fun little tip that my girlfriend and I use. We select a certain coin and every time we have one of those coins in our change from our everyday spending it goes into the piggy bank. You will be surprised just how quickly this money can add up and yet because you’re just getting rid of lose pocket change you barely notice it’s gone. You then have a reservoir of cash waiting for you when you really need it.
Make Saving A Game
Saving money can be a bit like going on a diet because it feels like it takes effort. Because you need to control yourself and even potentially deny yourself certain things. This can make it more of a chore than a pleasure.
If this is you then why not consider changing how you think about saving and actually try to make it into a game? See just how much you can actually save each month and consider having a contest with your partner or friends to see who manages to build up their savings account quickest.
Clear Out Your House
Just as I mentioned selling items of eBay consider clearing out your loft or garage and selling unwanted items from time to time to provide you with extra cash that you can save. Try to do this in plenty of time before your expensive months are upon you so you can carry out the process at your leisure and enjoy it rather than feeling under pressure.
Work Overtime
If your workplace offers overtime, consider taking it whenever it is available. Even if you don’t need the extra cash now it can be saved “for a rainy day” – which, lets be honest, always come sooner than we would like.
