can be addictive as any narcotic. You tend to spend as much as you earn, often more quickly. Learning how to manage your can help avoid the financial problems and even bankruptcy some people are facing.

No matter what your age or income, there are two basic rules that everyone needs to know. Those rules are firstly, only buy what you can afford, and secondly, pay your bills before spending on anything else.

Rule Number One

The first rule is really just common sense – buy what you need, not what you want, within the limits of what you can afford. Spending more than you can actually afford is often due to incorrect budgeting. Many experts recommend having three to six months’ worth of expenses saved – but just how do you work out how much that should be?

Your savings should include money to pay rent, or a mortgage, repayments, taxes, fuel, and utilities – the things you cannot live without. It does not mean that great pair of shoes you saw in the window, a new flat screen television, or a trip to the Caribbean. You can live without the nice-to-haves, and would have to do so if you lost your job.

At a time like this you must look carefully at services like your telephone and mobile, and eliminate all the extra services you signed up for but don’t really need. Television cable services are another area where considerable savings can be made by choosing a cheaper package. Check your contract carefully first, as sometimes you will be forced to pay penalties for cancelling or changing the contract.

Other than the basic necessities, you also need to keep money aside for emergencies such as unforeseen healthcare bills, car repairs and maintenance. Your is necessary in order for you to continue working, your car gets you to and from work or interviews, and you can’t live in a damp, leaking home. These things must be taken care of as and when they arise. Emergency funds should never be wasted on things that you want but don’t need.

The Second Rule of Money

Now that you have learned to only buy what you can afford, the second rule is ‘pay your bills.’ A bill is an obligation. If you have taken a product or service and have not paid for you, this is a form of theft. Although it is treated differently than someone who shop lifts from a local shop, you are still taking something that doesn’t belong to you until it’s been paid.

The pressure on us to buy the newest fashion, the latest electronic gadget or the next big ‘thing’ is enormous, and many base their self-image and self-worth on what they can buy. Does anyone really care that someone managed to walk into a store and buy something, like we all do every day?

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