If you could do with more money, you don’t necessarily have to switch jobs or take on extra work. Making some minor changes to managing your finances can put a few extra pounds in your pocket.
Therefore, we’ve prepared a list of ten top tips for money management. The sooner you get going on these, the better, so why not start today? Financial planning can be complex. It is always recommended that you use the services of a regulated advisor like Portafina when making financial decisions.
- Zeroise your debt.
Whenever we talk about improving your finances, we recommend getting rid of your debts. That’s because debts make it challenging for you to enjoy everyday life or plan for the future.
When zeroising your debts, pay off your high-interest obligations first. The more interest you pay on a loan, the less money is spent reducing the amount borrowed. Therefore, eradicating these obligations quickly is crucial. It will make more money available to pay off your lower-interest debts.
Zeroising your debt can take time and effort. Consequently, you can pressure yourself too much to make some headway. If you feel overwhelmed, consider talking to a debt counsellor to get help.
- Shop around for the best deals.
Whenever it comes to renewal time, shop around for the best deals. We are talking about things such as insurance and utilities. It is too easy to allow renewals to happen automatically.
The problem occurs when the amount you’re paying starts to rise. Over 40% of people could save on insurance cover or utilities if they shopped around for a better deal.
This tip can put some money back in your pocket quickly. Therefore, look out for renewal letters or check your direct debits to see what you’re paying. Then, use a comparison website to determine how much you could save.
- Put yourself first more often.
Wanting to help your family financially is understandable. Indeed, this is common among British parents, with around 56% of 18 to 45-year-olds having savings to which their parents have contributed.
Also, over half of British parents have given their children up to £5k without expecting to get it returned. Although it is great to help out financially, you should ensure doing so doesn’t impact your financial situation. Especially nearing retirement, it is okay to put yourself first more often.
- Invest as well as spend.
Often, it seems that your money has been spent before it gets into your bank account. At these times, making investments may be the furthest thing from your mind. However, setting up an investment that gets paid before spending that cash will enable you to grow your money.
An excellent short-to-medium-term investment is a Cash ISA. Although they don’t offer substantial interest rates, they are tax-efficient. You can save up to £20k each year without paying tax on any interest you accumulate. One potential drawback of a Cash ISA is the notice you may have to give to access your funds.
For a long-term investment, a pension plan is an obvious choice. These also have tax benefits as you’ll get relief on your pension contributions up to £40,000. As your funds are locked until age 55, they will benefit from many years of growth. Your funds are boosted by compound interest during this time, enabling them to grow even more.
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- Start budgeting.
Creating and maintaining a budget requires discipline and determination. However, the rewards are considerable, and they can help you eliminate your debt and build your savings.
Start by listing all your regular monthly payments, and ensure these get paid at the start of each month. Doing this will show you how much money you have left to allocate to other spending for the rest of the month.
Budgeting apps are available to help with this. They are straightforward to use, and many are free.
- Don’t refuse “free” money.
Okay, so the word “free” might not be totally correct. Still, many people are missing out on a significant amount of money they could receive for no additional effort. Such a case is a workplace pension scheme.
Part of the money that goes into your workplace pension comes from your employer. If you were to opt-out of this scheme, you would not receive your employer’s contribution. Many people have done this, so they are losing out on thousands of pounds of “free” money each year. Therefore, think carefully before leaving your workplace scheme.
- Plan for the unexpected.
Consider how you would cope financially in an unexpected situation or emergency. At some point, everyone experiences unexpected car repairs, sudden appliance failures, or some other minor catastrophe. You can minimise the inconvenience of these by planning for them in advance. Creating an emergency fund means you’ll have the money available to deal with the unexpected. You should have between 3 to 6 months worth of living expenses in this fund.
- Organise your finances
This tip deserves its own article, but we’ll make the main point briefly. Keep your finances organised by separating your money into different spending pots. Doing so enables you to allocate money to each part, thereby reducing the chance of overspending and sticking to your budget. Banking apps are an excellent tool for organising your finances in this way.
- Watch your digital spending
There are plenty of digital subscriptions on which to spend your money. Mobile phones, broadband, TV packages, and a host of website subscriptions mean your digital spending can quickly rack up. Generally, people are enticed into such subscriptions with attractive introductory offers. However, after the initial period, the costs tend to rise sharply. Therefore, be mindful of what you are spending, review it regularly, and look out for better deals for renewal.
- Get your pension working for you.
Paying into a pension is an excellent way to invest in your future. If you have already started your pension contributions, that is great. However, you also need to regularly check your pension performance to ensure it is working for you.
High management costs and poor performance could mean your pension is not doing as well as possible. By regularly reviewing it, you can take action to rectify these aspects and make sure you get the maximum value from your pension plan.