Budgeting carefully, and earning as much money as you can is a good start when it comes to your finances. But there’s more to it than that, even those earning a decent wage can struggle with money if it’s not being spent in the right way and they’re not prepared for the future. Here are some of the ways you can get your money in check.
When it comes to sorting out your finances, the very first thing you should do is sort out any debts you have. This is because debt is expensive, thanks to interest rates it accumulates and even a relatively small amount can spiral to unmanageable levels. If you have lots of different accounts open it can become confusing and it’s easy to fall behind, so sit down and work out exactly what you owe. Contact all of the companies you hold balances with and get an up to date confirmation of exactly how much you owe them. From there, you can work out how you can pay these balances down, maybe you could sell things you no longer need or pick up a few extra shifts at work. Perhaps you could tighten the belt for a few months to free up money which can be used to pay debts. If the balances are higher and you’re experiencing more serious difficulties, it’s worth speaking to a debt management company. They will negotiate with creditors on your behalf and can often secure frozen interest rates and reduced repayments. From there, every payment you make will pay off the balance, rather than just getting absorbed by interest. You can then pay off your debt in a way that works for you, prevents you getting into more money issues and prevents the balances getting any larger.
Once you’re out of debt, it’s so worth starting a savings account. Put a little money away each week or month and it will soon grow. Having this ‘buffer’ means that if anything crops up in life (which is often does) such as an unexpected bill or repair cost then you can comfortably cover it. There’s no point saving money while you’re in debt, any spare money is best spent on bringing down the balances so you’re not being charged additional interest. Once the accounts are closed, you can get out of the red (debt) and into the black (credit). Open a savings account that you can’t easily access, it prevents you from simply transferring money back out of it. You could set up a standing order to come out of your wages and credit the savings account each time you get paid, if it’s a small amount you wont notice it but it will add up and put you in a much better position to deal with lifes ups and downs.
Having access to cold, hard cash if you need it is great and sometimes it’s exactly what you need. If you car breaks down for example, you’ll need cash to be able to pay for the repairs. But with lots of things, getting insured is the answer. Contents and buildings insurance for example will protect your home if anything were to happen to it, so you’re not left out of pocket. Pet insurance, dental, health and even boiler insurance are all things you could consider. It can seem a bit annoying paying out each month ‘just in case’, but if the worst were to happen, you’ll be so glad you have that policy in place. It makes good sense financially, and can prevent you ending up in serious trouble with money if a bad situation crops up. Some cash as savings will be useful if your washing machine breaks down for example, but if your house burns down in a fire you’re not going to be able to just cover the cost. Without insurance, you’d be left with nothing.
Prepare for the future
Another way to prepare for the future financially is to think about much later in your life. Make sure you’re contributing to a pension pot as early as possible, a small amount each month over your lifetime means you’ll enjoy a much better quality of life once you retire. A probate plan will help ensure your wishes are met once you pass away, and that your finances are split up in the way that you want. Funeral plans are also worth putting in place, that way you have peace of mind knowing that your family won’t be left with a huge cost when you’re no longer around. These things can be difficult to plan for due to the nature of them, however once they’re done you can rest easy knowing that you’ve done what you can.
Families, what steps have you taken to get your money in order?