WTTM
Are you looking to improve your personal finances or find ways to manage your finances more responsibly? So take a look at the guide below, as we have listed some useful tips and tricks to improve your personal finances. Keep reading to learn more.
Budget plan
Creating a budget plan will help you monitor your money and keep it in tighter control. In your budget plan, you should list all of your income, expenses, and budgets for different areas of your life. This will let you know where your money is going and prevent you from overspending in certain financial areas. You can create your own budget plan or find templates online that you can then customize to suit your finances.
Once you’ve created your budget plan, you need to study it to find areas of your spending that could be reduced. For example, it could be subscriptions or memberships that you don’t use much. It also helps you create budgets for things like groceries for the month or bills that might be cut like heating.
Compare offers for utilities
When you pay for your home’s utilities, it’s common for prices to change, leaving you with sky-high bills from a previously reasonable supplier. If your bills go up, make sure you have a shop for a new supplier with lower prices. Utility bills can end up eating into your income significantly, especially when you don’t watch for rising prices. You can use online comparison sites to help you compare offers from different providers, or you can compare them by doing your own research.
Avoid pressure to buy branded items
With the growing popularity of social media and influencers, it’s more common than ever for people to feel pressured to buy designer items they can’t afford. This can lead to debt for many people, which affects their financial future. Try not to succumb to the pressure of comparing yourself to others online or comparing what you have to what your friends have.
Most people who buy brands can afford to do so because they are wealthy, receive designer items to advertise, or are in debt but don’t tell anyone. If you are going to spend a lot of money on things, then choose things that might hold their value and be sold for money in the future.
Use credit cards wisely
When you have credit card, it can be easy to get carried away with spending and buying expensive things. If you have a credit card, you need to be able to make only reasonable purchases with your card and control your spending to avoid going into debt. Credit cards can be a great way to build a good credit rating, which helps you apply for loans, mortgages, and financing plans.
However, you should only use it to spend on things you can afford, like a grocery store or spreading the cost of something over 2 or 3 months. If you think you’ll have trouble paying off your credit card before then, it’s best to avoid using it.
Create an emergency fund
An emergency fund is a type of savings that you don’t touch except in an emergency. For example, if you lose your job, your house or car is damaged and needs repair, or if financial difficulties hit you.
Emergency funds need to be tapped for any reason other than desperate times to keep you financially afloat. Ideally, an emergency fund should be a few thousand pounds or at least three months of your monthly income. This means that if you find yourself unable to work or lose your job, you will have a way to pay your bills and survive.
Another option if you have a large payment that you need to spread the cost of is to take out a payday loan. These types of loans are designed for short-term use only and should not be considered a long-term option in times of financial hardship.
If you have a big payment coming up and need help managing it before you receive your next payment, then payday loans, such as those found with expert brokers like Payday UK, can help. They offer instant quotes at no cost. Payments can be received in 15 minutes, between £50 and £5,000 depending on your short term needs.
Invest money
If you have money stored in savings that you probably won’t need to use, you may have considered investing it. Investing can sometimes be a good alternative to saving, as it gives you the opportunity to grow your money over time. You can invest your money in different ways, for example:
- Property investment
- Shares
- Dividends
- Invest in start-ups
- Loan your savings
Be sure to invest in things that you not only think will go up in value, but also interest you personally. This will help guide your decision making when it comes to choosing where to invest your money and why. However, one important thing to remember when investing is to try to diversify your investment portfolio. This is because if you invest in stocks, a sector of the market you are investing in could experience a crash, but you will always have other stocks to help cushion the effect on your finances and avoid a big loss.
Although it’s easier said than done, try not to be an emotional investor. If you see the value of any of your investments go down, try not to withdraw your investments too soon as market fluctuations are quite common and could go up after you have withdrawn your money. If you are invest in real estate or start-ups, be sure to do plenty of research before choosing to invest your money to make sure it’s a wise investment.
Saving versus investing
You might feel conflicted about whether to invest your money or keep it safe in your savings account. It’s understandable and, ultimately, no one else can make that decision for you. Investing involves risk, but it could also allow you to see your money grow over time, so it’s a matter of balancing the potential benefits with the risks. Holding your money in a savings account will ensure that it is kept safe and obviously carries no risk. However, this also means that your money will not have a chance to work for you. Since UK savings account interest rates are currently so low, you will see little change by holding your savings in an account for long periods of time.
Compound interest
Part of the allure of investing is due to compound interest. Compound interest occurs when the value of investments increases, earning you even more interest on your interest. This essentially creates a snowball effect, which can see your money grow significantly over time. Investing is usually a long-term game and you won’t see the benefits of compound interest until later, so it’s a great option for things like a retirement fund.
