Taking control of your finances and feeling more free can really transform your outlook on money and your life. It provides such a sense of freedom when you have a plan, whether you’re in debt or you are more comfortable and ready to start planning for the future. We’re going to take you through some steps everyone can follow to make sure that you are able to take control, whether you’re newlyweds handling your finances or someone living on their own wanting to take control!
Create A Realistic Budget
The very first thing you need to do in order to take control is to create a realistic budget. The first step is to figure out how much money you have and how much you owe. Look across your bank accounts at your current balance and savings, then also look at how much you owe in different debts. Make sure to be thorough here and write everything down, from larger credit card debts to smaller catalogue debts. If you’re in debt that you’re struggling to pay off and have some savings, we’d recommend paying off your debt, as the interest that accrues will only make things worse. We will get onto how to take control of debt in our next point!
Make a note of all of your outgoings (starting with essentials like rent, bills, and debt repayments, then moving on to non-essentials like clothes shopping, savings, holidays, and going out). See how much you’re spending currently compared to what’s coming in, then look at where you will need to cut back. Make sure you budget for unexpected spending as well, perhaps around £100 for the things you don’t expect, such as if your child’s school shoes break, energy is more expensive or you need an appliance repair.
Take Control of Debt
When you know how much debt you are in, facing it head-on is key. You need to be realistic about whether you’ll be able to pay it off on your own, taking into account the interest that will be building. You also need to make sure that you will be strict enough to pay it off yourself. If you think you will be able to pay it off, then set up direct debits on payday that directly pay off the debt, to make sure that it’s not an option for you not to pay it.
If you have any small thoughts that you won’t be able to pay off the debt, it’s important you look at options to help you. This could be debt consolidation, so bringing all of your debts into one place to make one payment. Another option would be to look for IVA advice, another form of debt consolidation where a significant amount of the interest on your debt can be removed. The key here is to accept that you are struggling and to look for help. There are so many options out there, and leaving the debt to build more will only make things worse. Even taking the first step and seeking advice can completely transform how you feel about your financial situation!
See Where You Can Cut Back
So, now you know how much you have to spend each month, you might need to make some cuts. Even if you don’t find you need to cut any spending back, it’s a great way to save some money without needing to compromise much at all. The money you save can then be spent elsewhere or go straight into savings!
One of the best ways to cut back is to look at any automatic renewals you have and make a note of when they’re due to renew. Rather than letting them just renew and likely increase as a result of automatic yearly increases, give them a call and say that you can see other providers are much cheaper and their prices are no longer competitive so you’re considering leaving (even if you have no intention of doing so). It’s very likely they’ll do what they can to keep you as a customer. Even if you only save £5 or £10 a month, when you do this across all of your bills, insurance, car payments, internet, TV and so on, it will really add up quickly.
Being considerate of your energy bills can also cut down your monthly spending quite significantly. Take showers instead of baths, have your heating and boiler on a timer, bulk make meals using one appliance and swap to energy-efficient light bulbs. These are all small things but again, will really add up.
Another area where you can seriously save is your food shop. Create a food plan before you go shopping and make sure you stick to your list and only buy what you need. Then, steer away from branded products and go for supermarket own brands. You can save so much when you do this, so make sure you give it a go and see how much your food shop reduces by!
Invest In Your Future
Lastly, it’s important to invest in your future if you do have any money left over. Once your debts are paid off, saving for things like a home and also retirement is really important. The earlier you start, even if it’s only £10 a month on each, will certainly add up over time. Rather than spending that £20 on a takeaway or that extra round in the pub, set up a direct debit on payday and prioritise your future.