There comes a point in most of our lives when we realise we need to get a better handle on our finances. It could be due to mounting debt, aspirations for a better standard of living, or a long-term financial goal such as buying a home. Whatever your situation, there’s no better time to get started than today.
The Money Advice Service reports we lose 46 minutes of sleep every night to money worries.
So, if you’re tired of feeling out of control, read these five simple steps to taking charge of your finances.
Most financial topics aren’t covered in great detail at school. From opening bank accounts to taking on credit and investing, we’re expected to pick much of it up ourselves as we go through life. Thankfully, there are plenty of ways you can expand your knowledge.
Try picking certain areas to read around in books or online when you can. And don’t be afraid to ask knowledgeable friends or family to share their wisdom too.
Identify financial goals
Having clearly defined financial goals can make it easier to get motivated about saving. As well as emergency savings to the tune of a few months’ income should disaster strike, most people have a mix of short and long-term targets in mind.
More immediate goals could include a new car or a holiday, while larger aims might be a wedding or a new home. You may also want to pay off a debt or become financially independent from your parents.
Create a budget
If you’ve largely winged it until now, making a monthly budget will give you full visibility of your typical income and outgoings. You’ll better understand what’s within your means and whether you need to make any adjustments.
Work out how much you typically spend on bills, living costs, financial products like car insurance, gifts, travel and leisure, then assign portions of your future income to these categories. You might do this on paper, by spreadsheet or using an app.
Cut down on unnecessary expenses
There’s nothing to say you should stop spending money and enjoying yourself, providing you can afford it. But the process of making a budget will likely help you spot certain areas where you can make cutbacks.
Brits waste a collective £25 billion each year on unused subscriptions, for example. Food is another common saving opportunity, particularly if you regularly waste ingredients or like to stick to premium brands.
Learn about investing
Investing can be a smart way to get more from your money and achieve long-term financial goals. All investments come with a degree of risk however, so it’s best to wise up and strategize before making any decisions with your money.
Learn about stocks, bonds and other financial investment opportunities to see if you could make your money grow. You may want to speak to a financial advisor or a trusted family member before getting started.
Are you ready to get a grip on your finances? Follow the steps above and notice the improvements to your financial and mental health.