Many of you are probably in a situation when your salaries and wages are just enough or not enough to cover all your monthly living cost and expenses. As a result people then start getting them into debt and struggle to get out.

What starts as small few hundreds dollars borrowing taken for couple of months then ends up as a big loans worth thousands of dollars being repaid for years.

There are several ways and methods that can help you achieve comparable living standard with the same amount of money and at the same time perhaps even save few dollars instead of borrowing it to cover the shortfalls.

We will discuss these recommendation broken down into couple of main points and then highlight our tips and tricks.

(1) Open several cheque (current or everyday) bank accounts

Preferably choose electronic accounts managed over the internet. These accounts have two main advantages. They provide easy instant access and overview about available funds.

They also usually have no transactional fee, therefore are free or very cheap to run. This is important as you will be doing more transfers between your accounts as compared to having just one account.

(2) Open also few savings accounts

You will be transferring savings to these. You can either open savings accounts for certain purposes (like holidays or new bicycle) or savings accounts for every member of your family.

Ideal are again the internet based online savings accounts that allow easy transfers and no transactional fees. Be careful with opening savings accounts that charge high withdrawal fees.

Once you know that you are disciplined and won’t be tempted to withdraw money from them then these accounts can offer you a higher interest. But for the beginning keep away from them, otherwise you may end up paying a lots of fees.

(3) Let your wages or salaries be sent to just one current account

If you have two incomes in your family then this can be a joint account.

Or if you have two separate accounts then it’s advisable transferring the money after you receive the wages into one common account. This will make the budgeting and organizing your living cost easier.

(4) Calculate amount of all bill payments due in the coming month

Even if you are paid fortnightly or weekly, still prepare your budget for the whole month. That’s because some expenses and bills and paid monthly.

Ideally you should prepare your budget for 2 or 3 months in advance. But for the beginning one month will suffice. Once you get into habit, then can extend it for a longer period.

You monthly bill payments are usually these: rent or mortgage payments, all fixed loan repayments (car loans or hire purchases), credit card interest, utility bills (electricity, gas, water), petrol, car registration fees, WOFs, phone bills, internet bills, Sky TV, kids kindergarten, school uniforms, etc.

Once you know what is the total amount of all your fixed monthly payments, leave that amount in your main current bank account.

If any of the above payments are made by your credit card then remove them from the total amount calculation and follow point 8.

(5) See what’s left after you subtract total amount of fixed expenses from point (4) from your total income and make allocations for food, clothes and other personal expenditure.

This is the money you can spend. If you still have any bill payments done by credit card, move that amount aside and add it into your credit card repayment.

What’s left can be used on food, clothing, entertainment, savings, school donations (don’t forget that school donations are voluntary, you can refuse to pay them if you don’t have enough money), holidays and other expenses.

Now you will need to distribute the amount across several current and savings accounts. First, transfer amounts that you wish to save into your savings accounts.

Always inspire to save at least some money. Even if it’s only 5 dollars per week. It will stack up over time, don’t worry.

(6) Always use separate account for your grocery payments

Groceries are the most common thing that is easily overspent. So, set the budget and stick to it. If you are running short, then buy cheaper food or change ingredients and cook cheaper alternatives (chicken wings instead of steaks, or even better is some vegetarian food for few days).

There are options how to cook nutritionally and cheaply at the same time. Get some recipe book from your local library.

(7) Use separate current bank account for all other payments than groceries

This includes clothes, shoes, entertainment, restaurants, bars, gadgets, games, etc. If you spend all your monthly allowance after 2 weeks then well, you will have to go without it for the rest of month.

There is no compromise, if you don’t stick to this rule then you’ll never come even with your money.

(8) Manage your Credit Card

Ideally would be not using credit card when you are trying to sort out your finances. Paying all expenses in points (6) and (7) should be made with debit card attached to your current bank accounts.

However, if you do use credit card and you also carry balance forward every month then you can use it to pay for these expenses. In such case transfer allowances for points (6) and (7) to your credit card.

Also don’t forget to add monthly credit interest to it, as for now it is your regular monthly expense (mentioned in point 4).

(9) Reduce your credit card limit once you repay any of your fixed loans

If you want to get rid of the loans quickly then there are two basic rules to achieve that. Rule one: Never take a new loan. You may be tempted to get that new bigger flat screen TV, latest iPhone or new Laptop.


Second rule: Allocate repayment amount of the repaid loan to another existing loan. You are used to paying that amount, so you won’t be missing it.

And if you allocate it to another loan, like credit card then you will get yourself out of debt much more quickly.

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