Whether you’re planning for your long-term future or looking at ways to manage existing debts, having your finances in order is vital for your peace of mind. Here are tips that will help you to manage your money and improve your financial wellbeing.
Understanding your finances, taking the steps towards financial wellness, and creating clear financial goals will help you feel more in control. Start by listing the goals you have for the future, from short-term or more modest goals to long-term plans. This could include clearing debts, saving for vacations, and putting away money for your retirement. Once you know what you are working towards, you can create a plan to achieve it.
Organize Your Accounts
Many of us have had the same bank accounts for years but are they still the best option? There are many types of bank accounts from current to savings accounts. Some charge fees, some are free, and some offer incentives and cashback to use them. Do a little research and see if there are accounts out there that better suit your circumstances. While you’re looking at your bank accounts, check that all the payments going out of your account are still necessary. You may find that you’re still paying for unused subscriptions.
Create a Budget and Reduce Monthly Expenses
If you want to achieve your financial goals, you need to make a budget and stick to it. If you have an effective budget, you’re less likely to accrue large debts or be caught out by unexpected expenditures. To make a budget, list your regular income together with your essential expenditure, such as mortgage or rent, utilities, loan repayments, food, clothing etc. Don’t forget to include non-essential expenses such as subscriptions, vacations, and leisure activities.
Once you have a clear budget, you’ll be able to see the areas where you can reduce your expenses. Do you have multiple entertainment subscriptions? Do you pay for a gym membership that you rarely use? Could you reduce your monthly expenses by reducing your payments on your student loan? You can refinance student loans into a new loan to help to reduce your monthly payment and give you more money to put towards other areas of your finances such as debt reduction or savings.
Manage Your Debts
Not all debts are bad. Some debts arise because you’ve made a positive investment in your future, such as taking out a mortgage or a student loan. However, if you have loans or credit card debt which is taking up a large percentage of your expenses, then it’s wise to reduce it as quickly as possible. This could mean switching it to a low or no-interest credit card or loan. Another alternative is to pay down the debts as quickly as possible by using any excess income.
Develop a Contingency Fund
Having a contingency fund will give you peace of mind that you are protected should you experience a sudden financial crisis. Ideally, this should be large enough to cover your outgoings for three to six months. Keep this money in an easily accessible account that is separate from your regular bank account.