The importance of spending money sensibly

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In order for a consumer to manage their finances in a way which is achievable, it is important to always be aware of what money is being committed to and when. From the age of 18 consumers are eligible to a whole range of credit based facilities which means if not managed correctly, debts are a possible outcome. Like never before consumers are spending money on a buy now and repay later basis which means the average budget of a consumer continues to grow and expend to account for the additional credit based commitments. Although lending and all borrowing has been available to the lower generations for many years, it is only in the last decade that the type of borrowing available has meant consumers are borrowing from the age of 18. In the past consumers tended to reserve borrowing for more traditional purchases, which required a high level of commitment, such as a house or car. In today’s economy consumers are happy to borrow for the likes of clothes, furniture and electrical based items; as well as the traditional spending which still takes place. It is as a result of this shift in spending habits and the ability to obtain the credit required at a much younger age, consumers as a whole need to be better able to manage their growing finances in an affordable and sensible manner. Today we will review how and why these changes have taken place and touch on some tools for ensuring consumers can manage their commitments in a way which is realistic.

As mentioned above the type of credit now available to consumers has changed a lot over the last decade and the consumers using them have followed suit. Nowadays a consumer aged 18 can not only borrow from a mainstream bank or building society but also a wealth of other credit based resources. Take for example the rise in short term borrowing. For over a decade now consumers have been using the internet to obtain loans which are smaller in value and require a much shorter period of commitment compared to bank loans. Via online application process a consumer can now gain a loan of between £100.00 and £500.00 and receive the money the very same day. The same can be applied to online shopping, nowadays consumers can be approved for a credit limit from the age of 18 and spend against this limit for the purchase of clothing and furniture and many other catalogue based items. Of course spending from an earlier age means consumers are having to learn to manage their finances as a priority to avoid letting things become out of hand very early on. It is of little surprise that the modern day consumer feels more inclined to spend money to be repaid on a monthly basis given how much the economy has changed. Today it is very common for consumers to be remained of all the goods and services which are available, simply by getting through the day. By this I mean advertising, whether it be online, on the radio or television or in shops themselves, consumers are constantly made aware of anything and everything which can be brought. As a result consumers are more comfortable and consider it more normal to spend on a credit basis.

Although if managed correctly there are lots of different types of borrowing which can be useful, equally if borrowing is not managed and maintained, it can easily become a debt which brings with it other complications. This is why it is so critical that consumers remember to spend within their means and not outside of them. The best way to understand what is realistic to an individual is by completing an accurate and honest budget. A budget in simple terms compares what is being spent monthly against what income is being received. Providing a consumer can cover their expenses using their income and still have a reasonable amount classed as ‘spare’ then in very basic terms the expenses already in existence are affordable. That said many consumers continue to over-spend in certain areas of their budget which could be reduced by taking better care throughout the month. This is why budgets have proved so successful because they can quickly give an indication as to where an individual’s wages are being spent during the course of the month and if possible, where money could be saved. For any consumer wishing to save money, a budget is always a great starting point