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I have put together five simple tips that worked for me and helped me to improve my finances. I and sure that it would help you to improve your finances, so that you can make your money last longer and be confident in your ability to manage your money.
Managing your money isn’t easy. With so many things we need to spend money on, it can be tiring and stressful to keep on top of it all.
With living expenses and grocery inflation at the highest many of us will have seen, now is a good time to look at your finances and see what you could do to better manage your money.
Here are five simple tips to help you improve your finances so that you are more confident in managing your money.
1. Build your emergency fund
- The first step to improve your finances is to set up your emergency fund. Your emergency fund is a pot of money which is set aside for unexpected financial emergencies. It is one of the most important aspects of personal finance.
- You might be confident managing your monthly income. You may be able to afford your regular expenses and have some money left over for luxuries. However, if any unexpected expense arose you may not be able to deal with it, leaving you with no clear option to turn to. Your emergency fund is there to get you out of these difficult situations.
It is a good idea to build up your emergency fund before saving for any aspirational goals, such as going on holiday or getting married. This is because if you need emergency funds, you do not need to dip into those savings pots.
To build your emergency fund, open a seperate savings account and ensure it is easy-access or instant-access. This means you can withdraw your funds should you need to. Savvymoneygirl recommend having a minimum of three months of essential outgoings saved in an instant-access savings account for when you need it.
You could set up a regular savings deposit to build your fund every month. At Serve and Protect, you can also automate your savings by automating deductions from your checking account meaning you save straight from your pay. This makes building your emergency fund easy and stress-free.
2. Create a budget plan
A budget plan is a plan for managing your money, either as an individual or household. Put simply, it shows the money coming in and the money going out. This is usually done every month or quarter.
Doing a budget plan is a great way to understand your spending habits. You can see where you spend the most money and find areas to cut down on.
Without a budget plan, it can be difficult to keep on top of your finances. If you are worried about your finances, doing a budget plan is a great way to reduce that financial stress. You will often find your situation is not actually as bad as you thought.
We have a free budget planner on our website to get you started.
3. Cut unnecessary costs
Your budget plan shows you where you spend your money over time. Therefore, it may highlight some areas where you are perhaps spending too much, or things you could cut out altogether.
You may be paying for a gym membership but haven’t been in months, or for multiple streaming subscriptions when you only need one or two. Cancelling these will give you some money back to help you better manage your expenses, or it could be saved into your emergency fund or for future goals.
There may be a few things you could comfortably cut down on. By reducing the amount of small purchases you make, or opting for cheaper alternatives like instant coffee at home, you can save a lot of money over time.
4. Pay off your debt
There will be times where your savings are not enough to cover every cost. You may need to borrow money at some point in your life.
Borrowing money can be a good way to spread the cost of an expensive purchase, as long as you are being charged an affordable rate. If your credit score is not as good as it could be, you may be charged higher rates to borrow. This means your monthly repayments will be higher.
Debt consolidation can be a good option to reduce your monthly repayments. Debt consolidation is where you take out one loan to pay off other debt, often at a lower rate. This means you have more disposable income each month, which can be saved or used to cover other expenses.
If you already have a good amount of money left over each month, you may be able to repay some of your debt early. This could either be as a lump sum payment, or by overpaying each month. By doing this, you may be able to pay off your loan sooner, saving you money on interest. Just be sure you won’t be charged any fees or charges, and that you can afford to pay extra.
5. Automate your savings
You may find it difficult to save money each month. However, the hardest thing about saving is just getting started.
A way to make saving easier is by ‘automating’ your savings. This means automatically making savings deposits at set intervals, usually every month. You may be able to set up a standing order with your savings provider, allowing you to choose a set amount to save each month.
At Serve and Protect, we make saving easy with deductions straight from your pay. You can save a minimum of £10 per month, with the option to change your deduction amount any time. All our accounts are easy-access, meaning you can access your funds should you need to.