Are you constantly stressing about the state of your personal finances? Don’t blame it on your anaemic pay cheque. Even if your pay cheque has been disrupted by COVID cutbacks. It doesn’t matter the state of your pay cheque: Bad money management habits are to be blamed if, even with the best intentions, you still find yourself borrowing from Peter to pay Paul at the end of each month. Unless you have a pot of gold buried somewhere in your backyard or you are literally printing money, understand that there’s only a finite amount you have to work with when you get paid, and so you have to figure out how to spend it wisely.

Stop spending more than you earn

This is the cardinal rule of sound personal financial management. Although it seems fairly self-evident, many people think that because they’re gainfully employed and in possession of credit cards, they can spend their money without consequence. Maybe you’ve only recently left school and started earning; the thrill of buying things can be intoxicating, especially if you were raised in an environment of sacrifice privation. Self-restraint is key.

Don’t wing it

A budget allows you to break down the amount of money you bring in and allocate your spending accordingly, so that you don’t end up in the red every month. Very loosely, the budget rule is that you allot roughly 50 per cent of your income to your needs, 30 per cent to your wants and 20 per cent to savings or paying off debt. You can use an old-fashioned envelope method, in which you separate categories of expenses in physically separate envelopes, or use an online budgeting app if you’re more tech-inclined. Once you make this budget, however, you have to closely follow it, or else nothing in your financial situation would have changed.

Stop relying on credit to pay bills

When you get paid, one of the first costs you have to reconcile is your bills. No, we’re not talking about your clothing bill. The bills here are utilities, rent/mortgage, and debt repayment. You know, those costs that help to establish you as a contributing member of society. Your credit card (which, remember, is in effect a bank loan and not free money) will quickly incur more debt if you use it to pay off debt, if you’re in the habit of only paying a minimum balance. So limit your borrowing; use cash to pay your bills. Also, it’s important to pay these bills on time; we’re living in a credit rating environment now, and so this affects your score.

Minimise impulse spending

Some people have never come across a sale they didn’t like. Always shop with a list and stick to it. If taco shells were not part of your meal plan for the week, don’t allow the smiling sales representative who regularly patrols the supermarket aisles to convince you how much you’ll save if you purchase a taco kit that includes the sauce. You’re not in fact saving because that spend was not budgeted for. Also, if you fancy yourself a “fashionista”, do yourself a favour and cancel and unsubscribe from fashion newsletters and notifications about sales, etc, that come to your inbox daily, to eliminate the temptation of feeling as if your life has no value without the newest designer outfit you can score for a steal. Be honest with yourself: How many outfits do you have hanging in your closet with the price tags still on them?

Avoid high-interest payday loans

Fast-cash facilities are very popular now, and can sometimes seem like a godsend, your only option. But they are usually predatory lenders, and outrageously expensive, with abusive and unfair loan terms and exorbitant interest rates targeted primarily towards desperate people who in turn will spend a long time paying off that debt. Consider instead making a payment plan with your creditors, to get out of your tight financial spot.

Refrain from wrong priorities

Jamaicans have swag, we all know this. It has to be the best of everything, for us. The best clothes, the best rides, the best homes. But be realistic in your purchases. If your pocket cannot reach a BMW, perhaps think about a Honda instead. Think about a home maybe not in the Kingston 6 area whose rent won’t relegate you to eating Top Ramen noodles three times a day. Also, don’t become somebody’s punchline by driving a high-end vehicle while paying rent for a house in a squalid part of town; carefully assess your priorities. Can you reasonably pay the car insurance coverage? The cost of replacement parts? The goal is to meet your obligations and have money left over to save in an interest-earning account.

Take advantage of free money

Yes, free money is a thing that means earning cash bonuses or rewards. Let’s say your company offers a pension contribution plan, which they match up to a certain percentage of your own contribution, opt wherever possible to go to the highest percentage. The company match is basically free money that will help you save towards retirement. Other instances of free money include grants, tax breaks, and unclaimed monies like unredeemed gift certificates, royalties, stocks taken out for you by relatives, and even, unlikely as it seems, uncashed cheques.

If you’re living pay cheque to pay cheque now and want to reach your goal of financial freedom in the short and long term, knowing how to handle money responsibly and not becoming its slave is critical. There is no better time than now to take a close look at your bad money habits and get back on good financial footing to regain control of your life.