Managing your finances
Keeping track of your money can be a difficult task for anyone but getting a grip on your finances should not be ignored. If you are thinking about taking a holiday this year, buying a house or a car then you need to understand your money so that you can work towards your financial goals.
You need to consider what savings you have, what available funds you have through income and other means, and what expenses you have.
Avoiding bad debt is crucial to your financial health and if you are unsure about your finances you should avoid credit or store cards as they can easily add up and spiral out of control. Your first step before saving for any large buys, should always be to clear any debt.
A “rainy day” buffer should be your next consideration. If you are not adequately prepared for any emergencies that life throws at you… such as car repairs, a broken boiler or unemployment, it can be very easy to fall into debt.
Start by putting away a little amount each month that won’t affect your cash flow and over a year this can build up quite significantly. Set up a monthly standing order just after your wages come in so that you don’t actually have to do the physical transfer – this will encourage you to see it as a normal monthly expense rather than optional savings. If you wait until you have paid all your bills and any other little extras you can easily justify not putting the money away to yourself.
If you are not in a position to save because you are on a tight budget focus on breaking even each month and cutting back costs where possible. Any money you do manage to save yourself from cutting your costs try putting away so that at the end of the month you can give yourself a little treat such as a bottle of wine or take away. To maximise your saving potential open up an ISA – this allows you to save a fixed amount each year absolutely tax free.
If you have no debts and are comfortably saving each month then you may be considering investments. There are a variety of ways to invest from fixed termed savings accounts to bonds and shares. A private pension is a key way to save for our retirement and joining a pension scheme your company may provide at a matched contribution rate should always be utilized.
