Organising your finances can be a daunting task for some people, but it is a key step in achieving financial stability and security, something that’s even more important in these current trying times. There are many mental and financial benefits to be had from controlling your finances including reduced stress and anxiety and a greater likelihood of approval for a new credit card, loan or mortgage. Whether you are trying to pay off debt, save for retirement, or simply create a budget, there are a few steps you can take to get your finances in order without feeling like you’re penny-pinching.
Create a Budget
The first step is to create a budget. This will help you to see where your money is going and where you can make adjustments to try to save more for your future. Start by tracking your income and expenses for a few months. This will give you an idea of your spending habits and pointers to where you can cut back. Then, create a monthly budget that includes all your regular expenses, such as rent, utilities, food shopping, insurances and transport costs, as well as any debt payments and savings goals.
Pay Your Debts
If you have debt, it’s important to prioritise paying it off ASAP. Start by paying off any high-interest debt, such as credit card debt, before moving on to lower-interest debt like student loans. Also, consider consolidating your debt with a personal loan or balance transfer credit card to simplify payments and potentially lower interest rates.
Shop Around for Deals
When you want to get something done straight away, it can be tempting to plump for the first offer you see, but shopping around for deals can often help you benefit from a lower price and the more low prices you can lock in, the more you’ll save. This can be everything from buying groceries to shopping for car insurance.
Build an Emergency Fund
An emergency fund is a savings account that you can use to cover unexpected expenses, such as car repairs, a washing machine or boiler breakdown or medical bills. A good yardstick is to try and save between three to six months’ worth of living expenses in your emergency fund. Start small by setting aside a portion each month until you reach your goal.
Save for Retirement
Saving for retirement is essential to ensure you have enough money to support yourself in your later years. Consider contributing to a private pension too, as this is an excellent way to ensure you have some money set aside for your golden age, to supplement your state pension.
Automate Your Finances
Automating your finances can make it easier to stay on top of your bills and savings goals. Set up automatic bill payments and contributions to your savings and investment accounts. This will ensure that you never miss a payment or forget to save. Advancements in AI and machine learning mean that these automations will continue to get better in the coming years too.