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A Guide to Managing Your Money: Top Money Management Tips

We know that thinking about money can be overwhelming, but whether you are concerned about saving for your best friend’s wedding gift or a deposit for your first home, there is no better time to get a grip of your finances than now. Many people lack basic financial knowledge, however building good financial skills is not rocket science and making simple changes can impact your life in a positive way.

To help you along your journey we have put together a list with our top money management tips.

1. Start budgeting

Does thinking about your finances induce feelings of uncertainty and anxiety?

Creating a budget allows you to gain a better perspective of your current financial situation and plan your future spending accordingly. The financial plan will ensure that you always have funds for your essential living expenses and may break down your disposable income to save towards other important goals, such as buying a car or saving for retirement.

Our Guide to Budgeting outlines the process step by step so you can easily create your personalised budget!

2. Reduce expenses and “invisible” spending

One of the biggest challenges we face is to win the battle with unnecessary expenses.

Being on a tight budget isn’t the only reason to cut out additional expenses. Decluttering your outgoings can have a positive impact on your financial freedom and can leave extra funds to be redistributed to other objectives.

Figuring out which bill to cut or reduce may not always be so obvious. Spending on non-essential items can quickly add up without you realising and something as simple as re-negotiating the terms of your utility and media bills can save you a lot of money in the long run.

Finally, don’t forget to pay attention to detail! Becoming aware of your “invisible” spending can also identify huge potential for reducing costs. A coffee or take-away lunch a day may seem like a harmless treat, however the cumulative effect of these “invisible” expenses can become a significant drain on your funds.

3. Start saving

The hardest thing about saving money can sometimes be just getting started!

Having a goal that you’re striving towards can help you stay motivated and build good saving habits, however it is not always necessary to have a specific purpose to start saving. The easiest way to jump on the savings express is to set up an automatic monthly transfer on your pay date and just observe how quickly your savings start adding up.

If you are a planner, your saving goals can be broken down to short-term and long-term goals. It is wise to begin with setting up an emergency fund that can cover your living expenses for at least 3 months. Other financial savings goals may include saving for a car or a mortgage down payment. Whatever you are saving towards, make it a habit!

4. Get out of debt

Being in debt can cause a lot of worry and sleepless nights, however the key to getting out of debt can often be as simple as creating your own money management plan.

Firstly, get in touch with your creditors. They want to help you repay in a way that you can afford so it’s always worth keeping them updated on your circumstances so that they know you are committed to repaying your debt and they can help arrange a suitable repayment plan.

There are several debt management strategies; for example, with the debt snowball strategy you repay the smallest debt off first whereas with the avalanche debt strategy you pay off the biggest amount first. Be aware that you need to assess each strategy against your individual situation and remember to talk to your creditors as it may be best to pay a little to each of them each month. Often tackling debt by paying off the credit with the highest interest rate first can be the most sensible idea.

5. Improve your credit score

A credit score is a statistical number used to evaluate your creditworthiness in relation to your historic ability and responsibility of repaying debt. This number can affect your financial status beyond getting credit. Your credit score is determined by many intertwining components and may be the determining factor for important life decisions such as buying your own home or even affect something as simple as getting a mobile phone contract.

Our Beginner’s Guide to Credit Scores is designed especially to help you avoid making common mistakes and give you tips on how to keep your credit score top notch.

6. Plan for retirement

A pension is a regular form of income, like a salary, paid out to you monthly when you retire so that you can cover your living costs. Planning for your retirement as early as possible can save you a lot of headache later in life. In the UK a state pension, a personal pension and a workplace pension, are available to everyone who is in employment and meets the basic criteria. You may have more than one different type of pension and it is important to understand how they contribute to your overall retirement pot.

7. Plan for emergencies

Although not all unexpected events are negative, if you haven’t saved a pot of cash for emergencies, they can throw your entire budget off course for several months. Even the most meticulous planner can be taken by surprise by a leaking roof or an unforeseen car repair.

Remember that building good financial habits takes practice. Planning ahead can seem like a foreign concept in the beginning but incorporating simple changes to your day to day life will soon turn you into a money management whiz.

More Information

A Guide to Managing Your Money: Budgeting

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