18 May Take control of your Financial Wellbeing
With all that’s going on around the current pandemic that is coronavirus, this has been a challenging time for everyone concerned, impacting so many factors of our lives, our physical and mental health, financial wellbeing, not to mention schools being closed and adapting to working from home.
Thankfully, the good, basic personal finance guidance that we should follow in ‘normal times’, is the same that we should be following today. Granted this is unfamiliar territory, however from a personal finance view, what we’d do during any bout of economic uncertainty can apply well.
Financial wellbeing is all about feeling comfortable and in control of your own financial position – the knowledge to make the most of your money, both on a day-to-day basis and through planned and unplanned events that may come up.
Understandably, that can be easier said than done, however here are some good money practices to keep you on the right path.
Plan your spending
Like you would maintain a balanced diet for your physical health, a budget can be the first step towards better financial health.
Why a budget? It helps you take control of your money and helps you decide where you need to spend. Essentials like rent / mortgage, utility bills and your mode of transport, whether that be your car or train plus, some things for you to enjoy.
Don’t forget that the important part of budgeting is to actually set aside time to forecast your spending – this could be monthly or every time you get paid?
Would you rather do it using technology? There are lots of apps available to help you do this.
Track of your spending
Monitoring your expenses is essential. You’ve created your budget and that is usually reasonably easy, however we all know, sticking to it can be harder. There are lots of free tools and apps to help you do this.
It is common sense, if you are conscious of when, where and what you’re spending, it can help you keep it under control. Monitoring in this way can also help you spot areas where you could cut back.
Not overspending is an important habit to get into.
Why? It is all about knowing your budget and using your pennies wisely, that way you do not end up feeling guilty.
Focus on your spending on essentials and those things you get pleasure / value from. A great example of this is spending money on clothes or going out with your friends, remember to include them in your budgeting, that way so you will not regret it later.
Avoid borrowing where you can
When used appropriately, believe it or not, borrowing can help you improve your finances.
A great example of this, is borrowing funds so that you can buy a house, so long as you can afford to keep up with the repayments. You should avoid borrowing more than you need to. An idea to speak to a mortgage broker, so they can advise the best path for you to take.
Borrowing any money for day-to-day essential expenses like food or bills, as this may could lead to difficulties. Especially if you use pay day loan or overdrafts with high interest rates.
Save where you can
Why not set aside money every time you get paid? You could use an app to round up your spending? Or do you get lots of loose change? Why not use a good old fashioned money box to save.
The key to saving is to make it a habit. Having goals is a great way to stay inspired.
You don’t want to be over-thinking every purchase you make, however it’s well worth doing your research!
How about earning cashback when you shop online – Top Cashback or Quidco are a couple of options.
Or searching for the discounted items when visiting your local supermarket?
Looking to fly somewhere? To get the best price, do your research into which days might be cheapest to fly and how long in advance you should book.
With the volume of options on the market for financial products – it can be overwhelming to choose which is best! Always worth shopping around to make sure you find the right products for you.
Take the time to fully understand products, including the dreaded terms and conditions.
Get into the habit of regularly reviewing your products and of course, looking around for better deals.
I’m sure it’s fair to say that a high percentage of people have had an unexpected bill come from nowhere.
You may have forgotten to account for your annual car insurance being taken? Or an issue with your house, that the insurance does not cover.
It always pays to expect the unexpected. To prepare, why not start an emergency fund? This way you’ll know that if something does happen, you’ll have savings to fall back on.
They say an emergency fund should be equivalent to about three months’ worth of living expenses.
Plan for the future
Everyone has different ideas about what their future might look like. The dream of taking a career break, setting up your own business or retiring from your career – the choice is yours!
To make that dream a reality, the more money you build, it will give you more flexibility to do what you want.
Put money aside as soon as you can – savings account, pensions or investments, it will all depend on your individual circumstances.