December 08, 2006

PRACTICAL TIPS FOR MANAGING YOUR FINANCES

With inflation reaching the 10 per cent mark, newspaper reports indicate that this may well be the most expensive Christmas in the last decade. Yes! This yuletide season, many households may be forced to change their buying attitudes as food prices alone have increased by 26 per cent since last Christmas. In this regard, families may do well to consider the following tips to help them make wise spending decisions that will not only see them through the Christmas, but the rest of their lives:

1. Communicate with the Family
Be upfront and work together with your entire family, including the children to decide on a plan of action as it pertains to finances and expenditure in particular.

2. Define Priorities
Establish that you cannot spend the way you did before and engage in careful planning, making wise spending decisions that are compatible with your earnings.

3. Create a Budget
Determine the most important things to spend money on and avoid, reduce or delay the less important expenses. Borrow as a last resort.

4. Avoid Impulse Shopping
Consider how much money you’re spending and not how much you’re saving particularly during the “Christmas Sales.”

5. Pay with Cash
Paying with cash allows you to avoid new debt and greater stress. Decide on how much you can afford to spend and divide it among those on your shopping list.

6. Manage your Credit Card
If you must use a credit card, use the one with a zero balance that you can quickly pay off in full or a credit card with low interest and ensure that you pay your bill off in a month or two.

7. Shop Around
Comparison shop for all your needs.

8. Manage your Telephone Usage
Take advantage of telephone savings plans especially during the Holidays

9. Forego Remodeling or Home Renovations
Postpone renovating the house especially if it means diverting money that can go to investments that may provide an opportunity to keep pace with inflation.

10. Create a Savings and Investment Plan
Factor in a savings and/or investment plan which will assist in meeting short and long-term life goals. Additionally, give adequate attention to retirement savings especially if your employer matches a portion of your contribution. Failure to do so can be likened to giving up a pay raise.