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In this situation I would advise people who are self-employed to build up a financial safety net. This money can be saved when they are having a good period and can then be spent when things are not going so well. How will I pay for the mortgage if business falls? Answer, by the money you have saved up, so calm down, you will be fine.
The periods when business is slow can be used to re-charge the batteries and can also be used to think up fresh ideas, of the direction you want the business to go in.
For all people it is important to know how much money is likely to be coming in per month and how much money is likely to be going out. In business this is not all that easy to do, however in family life it should not be too difficult to predict.
If the amount that is seemingly going out is more than what is likely to be coming in, we then need to look at what we are spending. This next idea might seem a little sad but can actually be quite fun. I would advise people to keep a record during one month, of everything they spend. It is not as hard as it may sound and will give you an insight on how much money you actually waste.
For example, how many people are members of a gym, but never actually go there? How much money do you spend on take-away food per month? Do you always need to use the car, is it not possible to walk a little more often, therefore saving on petrol costs? How much money do you spend on cigarettes? Do you really need the latest flat screen television?
During the good times we can afford to waste money, however if you are worrying about money, it is time to tighten your belt.
I myself try to save a certain amount of money per month and invest it in a unit trust. Over time the fund value builds up and if I ever need a lump sum for example, car repairs, I just cash in some of the units. I also allow myself to take out a certain amount of money at the start of each year. This helps me to pay for my car insurance, road tax and to book a family holiday. This has been working well for me for the last five years and is something I plan to continue.
It is always worth planning for the future in this way, not just to cover you if your car breaks down but also for many other reasons. You may want to build up a little nest egg to:
pay for your daughters potential wedding
buy the car of your dreams
have the holiday of a lifetime
buy a house
re-locate abroad
buy a business
for your retirement
help fund your childrens university fees
I am now aware of how much money I am likely to spend per month. I like to have treats and waste money as much as the next man. I am more than happy when money is tight to give up these treats and see it as a battle of wills.
I hope you have found this article interesting and of use.
Stephen Hill helps to promote a number of websites including:
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