It’s always important not to get into debt, no matter what income level you have. But this is especially critical if you do not earn very much. And this is quite real, although it requires a bit more work. In this article, we will look at a few reasonable ways to avoid low income debt.
The tips in the article will not make you millionaires, but will not worry about paying bills, vacations and minimal savings for the future.
- Keep your optional expenses to a minimum
To break out of a series of debts, try 1-2 months to live with austerity. Cancel trips, do not go to restaurants, unsubscribe from all subscriptions that are not related to your work, use public transport, do not order food home, watch movies at home, buy the simplest foods and refuse to buy clothes so much as not to throw out food. The important thing is that we do not urge you to live that way. This is morally and physically difficult and will only lead to disruption and uncontrolled spending.
But trying to save as much as possible for a short period will help you partially close your debts and feel confident in your abilities. After the experiment, analyze what things it was not difficult for you to refuse, on which you saved the most. Then return to your previous lifestyle, but considering all your conclusions. If you adjust your financial behavior so that you save even only 10% of your income – this will be a great success.
- Invest at least 10% of your income – or any other amount that is comfortable for you
Make it a rule to immediately set aside a small amount of your income for investments – this amount can be obtained from the previous paragraph. Open a long-term deposit with capitalization of interest and the ability to replenish it. Consider investing in ETFs. Remember that long-term investments are most beneficial. The specificity of the market is that in the end it always grows, despite temporary downturns in the process. If you cannot decide the minimum amount needed, use the retirement calculator. He will tell you how much you need to invest in order to go on vacation at a certain age.
- Say no to instant gratification of big desires
The monetary habit that separates the rich from the poor is to delay large, sudden purchases. Make it a rule and agree with your family: you save any major purchase (say, from 3000 rubles) for at least 24 hours. Don’t be fooled by marketing tricks such as “just for you today.” In today’s world, it’s hard to really miss out on big gains. If you miss the discount today, there will be another tomorrow. And to buy unnecessary goods even at a big discount is a waste of money. 24 hours is enough for a momentary desire to cool, and you really realize whether you need this purchase. Plan large expenses in advance – such as holidays, repairs, cars, seasonal clothes, child education, and equipment.
- Create a new budget
After you go through the 3 previous steps, you will already have an understanding of how much and what you can save on, so as not to get into debt, how much you can actually save monthly and how to plan large purchases correctly. Now it’s time to draw up a new budget. In addition to the planned revenues and expenses, the budget must specify financial goals with specific terms and priorities, a loan / debt repayment plan and a savings plan. If you have difficulties with budgeting, read our article “How to keep a family budget” – you will find 5 specific recommendations in it.
Creating your first debt-free budget can be a daunting task. But if you approach the issue systematically and gradually, you will surely succeed. Write if you manage not to get into debt, and subscribe to our blog so as not to miss the next useful article.