From time to time, we need to stop and take stock of where we are in terms of money. No matter how well you manage your own personal finances, there may be times where the routine slips or there have been changes that we haven’t made adjustments for. Getting ourselves on course financially can save us a lot of stress in the long term.
Here are a few simple things that everyone should be doing to ensure their finances are as healthy as can be.
Check Your Current Credit
When you took out your credit card, loan or mortgage; you might have shopped around and found the best deal for you. Times might have changed, and there may now be better options available. Use a reliable home loan calculator to review your loans and mortgage to make sure your repayments are working for you.
If you owe money on a credit card, look at zero interest balance transfers. Chances are if you are only making minimum payments; you are never actually reducing the debt, just the interest.
Review Your Credit Score
Life is a journey that takes us through many unplanned stops. Often we find at times that we need to spend money we don’t have because of a change in circumstances. It might be anything from needing repairs on your car, losing a job or something more serious like a tragic illness or a death in the family. These are upsetting and stressful times emotionally, but financially, they can be impossible to deal with.
Reviewing your credit score periodically can make sure that when you most need credit, you will be able to obtain it. You might be planning to take out a mortgage in the foreseeable future, but to do this, you will need your score to be in a good place.
Your credit score is based on the amount of credit you currently have and your repayment history. Your results tell lenders how safe it is to lend to you, and as such is worth keeping tabs on them to make sure your finances are healthy.
Your score can tell you lots and allow you to plan should you need to improve it. There may be simple things that you can do to improve your score, such as closing unused accounts, making sure you have the correct address registered or paying bills by direct debit so that you never miss a payment.
Plan a Budget
Start a spreadsheet. List all of your regular income in one column and all of your regular outgoings in another. Start your outgoings with the big things that you definitely can’t live without paying, such as your mortgage or rent and work down to things that are optional or a treat.
If there is anything on your outgoings list that you don’t use anymore or think you can get cheaper elsewhere; now is the time to fix that. Switch internet or phone providers if you can, as the welcome offers for new customers are often considerably better than whatever you will be paying now.
If you are paying for subscriptions or memberships to services that you are not using currently, cancel them. There is no point in paying for a gym membership if you don’t actually go.
Live Within Your Means
It’s hard to turn on the TV or browse Instagram without seeing other people doing the things that we want to be doing. It always seems as though some people are always on holiday or eating out at the fanciest restaurants. Your bank balance might tell you that you can’t do these things, and it is important to live within our means. Getting into debt over clothes, food and holidays will affect our long-term security and happiness.
You might want a new look and some new items in your wardrobe; why not buy second hand? There are plenty of bargains to be had if you don’t mind rummaging.
Inviting friends around and cooking a home cooked meal can be a more rewarding experience than eating in a restaurant; and with planning, can be much cheaper.
Plan a staycation. There may be beautiful places close to home that you haven’t explored. Many activities can be free or very cheap. You don’t need to go to the other side of the world to find fun and relaxation.
Put Money Aside
You never know what the future holds, so it is important to plan for the worst. Having savings put aside can help you out when something terrible happens. Having a buffer of around three months salary is recommended.
You should also start planning for your retirement early. It might seem like a very long way away now; however, people are living longer, and as such you will need more savings to live off for many years. There will also be massive shifts in the cost of living between now and then, so the amount in your pension pot needs to reflect those kinds of changes.
Ever wish you’d put some money into Bitcoin before it exploded, or had shares in Amazon or Apple twenty years ago? Investing and trading in shares can be a fantastic way of making money without too much time or work.
Always make sure that you do your research before investing. A lot of information you will read might be very biased towards a certain investment, so try to consider all viewpoints and remain objective. They may take a commission, but financial advisors are definitely worth paying for if it is likely that you will be investing a lot of money, it is their best interests to manage your investments well so that they see their cut of the returns.
Invest across a range of different areas and make sure that the risk profile suits you. If you need to get that money back, then you are best looking at low risk. There may be minimum amounts that you can invest, so shop around and make sure that you are investing in a manner that suits you.