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Five tips on how to avoid the debt trap
Follow our tips to avoid falling into debt and to keep your finances under control.
- Beware of 鈥渉idden credit鈥� when shopping.
- Draw up a budget: the key to keeping your finances under control.
- Save so you have a financial cushion 鈥� the more, the better.
- Use Digital Banking and budgeting tools to keep track of your finances.
- Ask for help if you don鈥檛 know what to do.
Often you only recognize how expensive life is when you move away from home. No wonder 聽(in German) jumps 70-fold after people turn 18. The good news, however, is that debt can be avoided. These five tips will help.
- 01
Pay sooner rather than later
These days new shoes are just a click away. And the temptation to buy on account, use a credit card or 鈥渂uy now, pay later鈥� is great. If you don鈥檛 (re)pay the outstanding amount on time, you may incur interest on overdue payments and reminder fees. It鈥檚 easy to lose track of your spending and end up in debt.
Our tip: Avoid 鈥減ay later鈥� options and buying on account 鈥� especially if the service costs something on top of the purchase price. Instead of being surprised by the monthly bill, you can transfer money to your credit card in advance or use a prepaid card. This lets you keep track of your expenses and avoid spending money that you didn鈥檛 actually budget for.
- 02
Draw up a budget
You鈥檝e spent your salary, and there are still a few weeks to go until the next paycheck 鈥� but your favorite festival is just around the corner? It鈥檚 easy to underestimate the costs incurred over the course of a month.
Our tip: A聽solid budget聽is the number one way to avoid debt. First get an overview of your income and expenses. Then allocate a monthly amount for all costs, including those that are only incurred quarterly, semi-annually, or annually.
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- 03
Set aside money systematically
An emergency visit to the dental clinic, a bike repair, your best friend鈥檚 bachelorette party 鈥� life is full of unexpected expenses. If you set aside reserves in good time 鈥� and include them in your budget 鈥�, even big bills won鈥檛 be a problem.
Our tip: Set聽savings goals聽and set a fixed amount aside each month. It鈥檚 best to transfer the money by standing order to a separate savings account. You鈥檒l soon have the financial cushion you need.
- 04
Use Digital Banking and budgeting tools
Even with the best of intentions, it鈥檚 not always easy to keep track of all your income and expenses in the hustle and bustle of everyday life.
Our tip: Use Mobile Banking, including all its features and helpful budgeting tools, to keep your finances under control at all times. Here are some examples:
- 05
Compare prices and save
Sometimes there鈥檚 something you just have to have. But maybe it doesn鈥檛 have to be today, especially if the price is (still) very high?
Our tip: Shop out of season and compare prices from different providers. You may want to wait a little, for example, until early summer when your dream snowboard is on sale.
You can also save money on smaller purchases. Here are some useful聽savings tips for everyday life: When shopping in the supermarket, for example, a detailed shopping list can help, as well as keeping an eye out for special offers. Bonus programs from online and physical stores or credit card providers also save you money.
Before you 鈥渙fficially鈥� get into debt (for example, by not paying bills on time), ask family members or other people close to you if they can help you out financially on a temporary basis. Our tip: Document in writing how much you have borrowed, by when you will repay the amount and in how many installments. This will prevent conflicts.
If, despite all your efforts, you fall into debt and don鈥檛 know what to do next, visit a (in German)聽as soon as possible. They can help you get your financial situation back under control step by step.
One way or another: You are not alone with your finances and questions. It is important that you actively address the issue so you can take your future into your own hands. Do not hesitate to arrange a consultation. We鈥檒l be happy to assist you.
