Avoid debt with these five simple strategies
Looking at ways to avoid debt? It can be a challenge! With advertising thrown at us from every possible angle these days, it’s not hard to see why there are so many people who are drowning in debt. There are constant ads for getting beautiful home furnishings, booking a lavish holiday, or splashing out on a new car (because apparently everyone needs to grab an EOFY bargain!).
But there are some really simple ways you can avoid racking up debts that might quickly become seemingly insurmountable. Let’s take a look at five easy ways you can avoid getting into debt.
1. Avoid debt with an emergency fund
If you don’t already have an emergency fund set up, start one now. Put a set minimum amount in a separate bank account every month and forget about it. If something unexpected crops up, you can use your emergency fund without having to rely on a credit card to cover your expenses.
2. Don’t use credit cards for everyday spending
It can be tempting to pop your weekly shopping and other random bills or payments on your credit card. Before you do, stop and think. Do you have the money sitting in another account that you could use instead? Putting unnecessary spending on your credit card will mean you’ll be paying unnecessary interest on things you could have paid for from your savings.
3. Question impulse buys
Sometimes you see something you aren’t expecting to buy and it can be hard to resist – especially if it’s a great deal! But before you pull out your wallet or purse, ask yourself the following questions:
- Do I already have one (or more) at home?
- Do I really need a new one?
- How often will I use it?
If you can’t justify your spending to yourself, avoid the debt and put that purse away!
4. Shop around
When you’re in a shop and they’ve got the exact thing you’re looking for, can you be sure you can’t find a better deal somewhere else? Before you go shopping, do your research online and see where your desired item is stocked and what it costs. Many stores carry the same or very similar ranges, so by doing your research online first, you can be sure you are getting the best price before you buy.
5. Don’t spend what you don’t have
This one seems too simple, but it really does work. If you haven’t got the money in your bank account, don’t buy all the things! Too many people are set on instant gratification with a view to ‘buy now and pay later’. With credit cards and, more recently the advent of Afterpay, it’s so easy for people to spend what they just don’t have.
If you’re on a slippery debt slope or would simply like to start managing your finances better, speak to a Penrith financial advisor at Creo Wealth.
We look at the bigger picture when it comes to your finances and can help you make sound financial decisions that will provide you and your family with financial stability for years to come.
Important Information: The information provided on this webpage is intended to provide general information only and the information has been prepared without taking into account any particular person’s objectives, financial situation or needs. Before acting on such information, you should consider the appropriateness of the information having regard to your personal objectives, financial situation or needs.