Money matters in life. Even if you don’t like the idea, we all need it to eat, have a home to live in and enjoy the activities we like, and so it’s important to take it seriously. If you’ve spent large part of your adult life worried about money and falling into trouble with your finances, it’s time to make a change.
Money doesn’t grow on trees, but there are ways you can improve your situation or just make the most of what you have. Here are some ideas for going about it.
Get out of Debt
Being in debt is seriously bad news for your finances. Each month that you carry a balance with creditor you’ll be racking up interest, and if you only ever make the minimum payment each month you’ll pay far more back than you ever leant. It’s not uncommon for people to pay back many times what the original debt cost, especially if interest rates are high. Even a small amount of debt is bad news as it can spiral, so work on paying down all of your balances and closing the accounts. It’s far better to save for the things you want and need rather than rely on credit. If you’re experiencing more serious debt issues, the best thing you can do is speak to a debt management company. These can negotiate with creditors on your behalf and can often get interest rates frozen (or reduced dramatically) meaning every payment you make goes towards paying off the debt and isn’t just absorbed by the interest. Aim to have just a mortgage as your debt- loans, credit cards, store cards, even car finance just aren’t worth it. It’s better to start a savings account and buy what you need with money you’ve already got, rather than spending it before you have it.
Once you’re out of debt, your next step is to save up. There’s no point saving while you’re in debt, it makes better financial sense to use the money you have to pay down balances to reduce the interest. But once they’re gone, you can work on building up a good buffer. This means any unexpected bills or expenses can be covered without you falling back into debt, it could be anything from a broken down washing machine to a broken down car. Once you have a good buffer, you could even start a long term savings goal- such as money to put down as a deposit to buy a house. Put a little away each time your paid and before you know it it will grow into something really useful.
Stick to a Budget
It doesn’t matter if your earnings are large or small, if you don’t stick to a budget and manage your money well, you’ll always struggle and can get yourself into trouble financially. There are loads of ways you can play your budget these days, from traditional methods like calendars and spreadsheets to new fangled apps and software. Find out what works best for you. One easy way to budget you money is to set up a separate bills account, and then set all of your bills to come out of here via direct debit. Work out how much you need to put in each week or month, and on payday simply transfer that amount it. No ringing up bills or going to websites to pay them, it all comes out itself and as it’s a separate account, you’ll never accidentally spend the money.
Invest Your Money
Once you’ve managed to save up a decent amount, instead of just letting it sit in the bank, investing is a good way to make you money work harder for you. It’s a way to turn a little into a lot more with no real effort from you, if you used a forex broker for example they would deal with everything on your behalf. Other ways to invest money include utilising ISAs or investing in property. If you get a buy to let mortgage, your tenants rent would pay this off every month and at the end of the term you’ve had a house essentially bought for you. You could then sell this and get a lump sum of cash, or enjoy having a regular income. Again, using an agent means there’s very little hassle to you, they will chase up any late payments, deal with tenants, run background checks and everything else that needs to be done when you’re renting out a property.
Find Alternate Income Streams
Regardless of what you do, having alternate income streams is always a smart move. Jobs aren’t as safe as they once were, from economic instability to the fact that the world is fast pace and businesses come and go, very few of us have a ‘job for life’ which is what our grandparents and previous generations enjoyed. If you were made redundant tomorrow, lost your job or got ill, a source of income that you could earn from home would be highly appreciated. Plus in the here and now, it’s extra money that can help you to pay off debts or save. It could be blogging, freelancing, running a home business or being a part time remote worker for another company.
Plan for the Future
Planning for the future can be difficult, it seems like such a long way away that it’s hard to imagine what life will even be like. If you plan properly now, you’ll put yourself in a much better position when you retire, and won’t be stuck on a measly state pension. This is a time in your life that really should be about you, you’ve raised your family, you’ve worked hard, now it’s a time to invest in yourself and do the things you want. You can’t do that when you’ve not saved enough money. Get your pension pots into one place, and start making regular payments towards them.