One thing many people may struggle with is managing their finances so that everything runs smoothly and so that they have plenty to save. For some, simply earning more can solve this problem, but even for those who earn a higher than average wage, they can still fall into the same pitfalls with money management as others. Here are some ways managing your finances can be made simple so that you can relieve any finance-related stress and look forward to a healthier financial future.
Choose Lenders Wisely
If you need to borrow money in the short or long term, choosing the right lender can go a long way in helping you have manageable finances. Seeking out affordable options for credit cards, personal loans, or payday loans will ensure no matter the amount you are borrowing, you can easily maintain the repayments and enjoy more flexible terms. By choosing those that work with responsible lending guidelines, you can ensure you are not left overextended by the loan amount, interest, and repayments. Find lenders that are Financial Conduct Authority (FCA) approved, as these will ensure that they will only approve the amount and terms you want if you have the affordability, so you won’t fall into financial difficulties. This will help you avoid taking out further loans that you actually can’t afford to maintain so that you can manage your finances more successfully.
Stick to a Budget
Why many people may struggle to manage their finances is because they do not account for some of their spending each month. While it can be clear what your essential outgoings are, it’s the regular non-essential spending that will often go unmonitored. Those impulse buys and extra purchases can quickly add up and leave you with very little to put towards your savings goals, for example, so this is where budgeting will help. It is worthwhile to periodically go through your current income and outgoings so that you can see a clear picture of where your spending goes. It could be that you have plenty of disposable income after all of your essential bills are paid, something that can quickly diminish with lots of non-essential spending. If so, budget an amount that you will stick to for non-essential spend each week, leaving an amount to put towards your savings. Over time, this will help build a savings fund and keep those non-essential purchases to a minimum.
Make Your Money Work For You
Part of successfully managing your finances is putting your hard-earned savings to good use. You could choose to keep those funds in your bank account, but the temptation then is to see this as funds to spend. You could also put this money into a savings account, but depending on which you choose, you may not earn any interest on it. This is where looking for ways to make your money work for you through an ISA or investments can make a difference. An Individual Savings Account (ISA) is a way to save your money tax-free while earning higher values of interest than with a regular savings product. You can place up to £20,000 per tax year into an ISA and choose from different types including a cash ISA or stocks and shares ISA. Using this type of product can help your money go further so when you want to place a deposit on a property, for example, the money will have grown quicker than if left in your bank account.
Managing your finances isn’t always easy, so the above will provide some pointers on where to start and how to maintain it. It’s always recommended to seek independent financial advice on the best ways to maximize your savings or budgeting your outgoings. You’ll find further online resources at The Money Advice Service and Citizens Advice.