5 Tips when things get financially tight

For many consumers in Germany, financing everyday life is a problem. Over-indebtedness is still a taboo subject, which is why too few people seek help. That said, there are solutions to financial problems in most situations. Those who seek advice can often reduce costs by making a few changes and thus have more money at their disposal. Below are five valuable tips on how to reduce expenses and create more financial freedom.

5 Tips when things get financially tight

Tip 1: How to get an overview of income and expenses?

The first step is to get an accurate overview of expenses and income. Here you really need to list all income and especially the expenses. The latter are divided into fixed costs, food and leisure time.

The fixed costs are expenses for rent and utilities, insurance, contracts and loans. Food expenses are logged over a few weeks, making them transparent. Already at this point you can tell if a household is spending too much money. After subtracting all expenses including for leisure and pleasure, about 20 percent of income should be left over.

Tip 2: Cancel unimportant insurances: Which insurances are worthwhile?

Another step is to cancel unnecessary insurances . These include equipment insurance for bicycles, the smartphone, TVs, laptops or eyeglasses, for example. Often up to 50 euros per month can be saved here.

Important insurance policies, on the other hand, consumers shouldn't cancel. These include, for example, household insurance and private liability insurance. Those who switch to Friday digital insurance can often reduce their insurance costs. Here at least a comparison on the Internet is worthwhile, which can be completed in a few minutes and save a lot of money for it.

There are also some points to consider when buying car insurance that can save you money. For example, partial and fully comprehensive insurance for older vehicles are unnecessary and expensive extras that can be cancelled.

Tip 3: Unnecessary and expensive contracts: Which contracts can I cancel?

If you want to reduce your running costs, you should start with your contracts. Most of us own a number of contracts, especially families. There is savings potential, for example, through a cheaper Internet tariff . In some cases, the monthly cost here can be reduced by 20.

The same applies to mobile phone contracts. Especially families with children often have several contracts. If money is tight, this is where you should start first. Restrictions on mobile data usage and not using flat rates can quickly reduce costs by 15 euros per month per connection.

Tip 4: Manage expenses better

Uncontrolled spending is a common reason why money runs out in the household at the end of the month. Those who set a strict budget and manage to stick to it can prevent this from happening.

This starts with keeping a budget book and listing all expenses there. Then it quickly becomes apparent which items are eating up an inordinate amount of money. Calculate a maximum monthly amount available for each line of business. Here, the budget is based on what is available after deducting all fixed costs. A portion is left over to achieve one's savings goals.

Tip 5: Reduce energy costs

High electricity costs are a burden on cities and private consumers alike. For this reason, saving electricity is becoming increasingly important and many households still have potential. Unknown power guzzlers include ceiling chandeliers in the living room, which often use 300 watts. An 8.5-watt LED can provide comparable brightness.

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