commerce Bahrainthismonth.com 48 October 2024 Over the last few months, Business Consultant, Pria Masson, has been speaking about how to manage money in many small ways from understanding your relationship with money, to understanding money and budgeting. This month, she takes a relatively unpleasant route, one where she discusses damage control with money. She walks us through what can go wrong, why it happens and how can you take steps, however difficult they may be, to get on a path to recovery. Write It, Record It, Know It The first step is to find out how to break even. The first step to do that, is to get into the habit of writing things down. Use notes on your phone, excel sheets, family WhatsApp groups – whatever works for you. But, have a clear, consolidated view of all your expenses. This means one place where you can see the expenses on every credit card and bank account that your family holds. Include in this the EMI on the loan and credit card debt accumulated. Similarly, in the same way and in the same place, know what your family income is including all earnings on investments, salaries, rent etc. Once you have the totals, that is your starting point. Break It Down Next, I would prioritise paying off credit card debt because it is one of the most expensive forms of financing. To do this, if you need to pull some money from savings abroad or sell some investments, it may be worth it depending on the amount involved and the earnings on those assets. If that is not an option, check and see if there is a cheaper source of financing available to you that can be used to pay off credit card loans. For MONEY MANAGEMENT When Things Go Wrong As early as when we were in school, we all learned the basics of money and ‘breaking even’ when we earned and spent our pocket money. The principle was simple – our parents or care givers gave us a certain amount of money to spend and manage. If we ran out of it, we had to either find a way to earn more, go back to our parents and ask for more, or just make do until the next month arrived. That’s the principle of money, whether personal or work related – you must manage with what you have or you’re in trouble. What makes this challenging? Credit cards and loans in all their forms. They give you an option to spend more than you have today, assuming you will earn enough tomorrow to pay it back. Everyone aims to be able to complete this cycle, yet, calculations go wrong, unforeseen circumstances occur and financial stress builds. This financial stress and burden are a common story across the board. It stems from many small and big decisions which somehow seem impossible to get a grip on. However, the threads that hold this chaos together are quite simple. Below are just some ways in which I would handle this, and these are in no way a comprehensive framework or specific advice. For that, you need a personalised expert opinion. Use this as what it is, a set of guidelines.
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