There is a lot more to being good with money than just making ends meet, but you don’t need to worry if you aren’t incredible at maths or savvy on the latest finance news. We are here to show you what improving your financial habits doesn’t have to be difficult with 7 practical tips for managing your finances.
1. Have A Budget
This is the foundation for any financial plan. Many people may not want to create a budget because it takes time to put together. However, all you need to do is check your monthly income against your essential spending and other financial commitments to see how much you are left with at the end of each month, and if there are any areas to cut back on. It doesn’t need to be an amazing budget with all the bells and whistles, just enough so you understand your finances a little better.
2. Track Your Spending
Once you have your budget, you can use it and your bank statements to track your spending. Small purchases here and there add up quickly, and before you know it, you’ve overspent. Save your receipts and write down purchases in a spending journal, categorising them so you can identify where you can cut back.
3. Pay Off Existing Debts Before Applying For Other Credit
Life can be unpredictable and leave us in a position where we need extra help to cover our finances. However, it’s essential that you pay existing debts before you apply for further credit. If your debts start to build and you struggle to make repayments, you may damage your credit score. While there are poor credit options available, like bad credit loans UK, it is better to have a good, maintained credit score instead.
4. Make Sure You’re Paying The Best Prices
Nowadays, it’s easier than ever to make sure you’re getting the best deal for your money. You can use online comparison tools and calculators, which will do all of the hard work for you to find the best deals available. You can also speak to your current bill and banking providers about why you want to switch, and they may even drop the prices for you.
5. Save Up For Big Purchases
While being able to make a large purchase gives us that temporary gratification, being able to delay the spend will go a long way. You shouldn’t need to sacrifice your essential spending or put a big purchase on to a credit card. Instead, give yourself time to evaluate whether the purchase is necessary, and save up to achieve it.
6. Contribute Regularly To Your Savings
Depositing money into a savings account each month can help you to build healthy financial habits. If you want to take it one step further, you could set up an automatic transfer for the money to move across your accounts each month. That way, you won’t need to remember to do it yourself.
7. Set Achievable Goals
To keep yourself on track, you should set yourself realistic targets with concrete steps to achievement. If your ultimate goal is to buy a house, work out how much of a deposit you would need, how much you should save each month, and you are going to do so. By breaking down your target into manageable steps, you are more likely to stay on course and achieve your goal.
For more help or information on saving money, please speak to the Money Advice Service.
