How to start a personal financial plan
If you think you’re truly awful at handling your own money, worry not. You wouldn’t be the first! Especially as the UK faces rapidly increasing energy costs, though, it’s important to get better acquainted with balancing your books.
That’s why our handy guide will outline some tips and tricks to get yourself on the right road to creating stable and sustainable financial habits.
Take a look at your current situation
Put aside some time to go through your current finances with a fine-tooth comb. Take a detailed look at your bank statements, identifying every outgoing, no matter how small it is.
Work out whether you can actually afford the money that’s leaving your account every month. Write down your monthly income amount and total up your bills to find out what spending money you have left.
If you have some unnecessary expenses that you can easily cut out, make sure that you do so. This will help you to focus on improving your spending habits, by clearing some of the mess and making it easier to assess things at a glance.
Consider your credit score
Knowing your credit score can help you to better understand the current state of your finances and put into perspective your spending habits. If you find out that your credit score isn’t great, it’s time to re-evaluate.
Having a healthy credit score means that you’re more likely to be accepted on those big life purchases, including mortgages, car payments and various loans. Unhealthy credit scores are likely to hold you back, restricting you in the long run.
There are numerous ways in which you can improve your credit score, from registering on the electoral roll and paying bills on time to using credit cards regularly and responsibly.
Get on top of debt
Paying off your high-interest debts should be your top priority. This can help to improve your financial stance and make you feel more in control of your money.
High-interest debts will cost you more money in the long run. Getting these out of the way first will give you a bit more peace of mind and remove some of the financial strain that you’re feeling.
Alternatively, you could aim to clear your smaller debts first to feel a sense of achievement? Dong so will feel like a reward, leaving you feeling motivated and determined to do the same for your remaining debts.
Set goals
Do you want to save for a house? Are you looking to create an emergency fund? Perhaps you hope to travel the world.
Creating small, achievable targets to help you to meet those larger savings goals can encourage you to think more carefully about what you’re spending and how much you should save every month in order to reach them.
It’s easy to feel overwhelmed when trying to save. Implementing habits such as low-spend weeks or setting up a standing order to your savings account can make all the difference, so focus on it bit by bit and you’ll feel confident in tackling things sooner than you might expect.
