Manage your financial worries with these seven easy steps
Approximately 30% of people in the UK are not confident with their finances, according to the Financial Capability Strategy.
Around 11.5 million have less than £100 in their bank account, with over nine million individuals in major debt. With these numbers alone, it is not surprising that so many people re worrying about how they will be able to get through the next day.
However, the impact of ignoring our financial situation can lead to additional stress when you try to make ends meet on time. If you prefer to take matters into your own hands, here are seven ways for you to manage your finances.
1) Assess your current financial State
Some people refuse to look at their financial state for fear of how bad it may be. But it’s important not to stick your head in the sand – it will only Mae things worse. (Also things might not be as bad as you fear, and you could be worrying unnecessarily.)
Gathering all of your financial statements, expenses, and income will give you an idea on how much money is being circulated in your account. From here, you can determine if it is possible for you to apply for a bad credit loan to help pay off outstanding debts.
This may sound counterintuitive, but once you have paid off most of your debts, you will only have one loan to focus on which can help you feel less anxious about your finances.
2) Start budgeting your income
Budgeting your finances can be a challenge, especially for first timers. The main purpose here is to ensure that your basic utilities, such as water and electricity, are paid on time.
It would also help you figure out where the rest of your money goes, such as entertainment, food, pets, and other expenses.
By budgeting your finances, you can prioritize which of your bills need to be paid for first, followed by food and personal needs. Sticking with a budget may prevent you from spending on luxury items and services, but it helps your financial rating.
3) Take a break from spending
If you want to be able to manage your finances better, why not go on a spending break and just reuse what is already available at home? You can make up new recipes with the canned goods you have at home and even use coupons and gift certificates when buying groceries.
It would be better to leave your credit or debit cards at home as you will be forced to use your budgeted funds instead. This will be a challenge at first, but once you curb your spending habit, you will see a significant improvement with your finances.
4) Follow a debt reduction plan
It is impossible for us to not incur some form of debt at some point in our lives. Aside from mortgage, items we buy with our credit cards are considered as debt that needs to be paid.
Unfortunately, if we have several debts to worry about, it can be overwhelming to handle. This is where a debt reduction plan may come in handy.
Basically, the goal of this plan is to start with paying off the smallest debt that you owe, then work your way up. Any debt paid, will add to your savings which you can then use to pay off another debt. Continue doing this until you have paid your loans until all that is left is your mortgage.
Once you are now free of other financial problems, you will be able to focus on paying off the biggest debt on your finances.
5) Stick with your financial goals
Making your debts disappear overnight is impossible. Fixing them will take time which means that you need to stick with the financial plan that you have put in place.
There is no need to rush with paying everything because you also need to consider your day-to-day needs. Keep in mind that your debts didn’t pile up overnight, but rather they snowballed into what it is today.
By strictly following your financial plan, you will see some positive effects on your current financial standing. This will take time, yes, but by combining this with the steps above, you will be worrying less about your finances soon.
6) Learn the art of saying “no”
One of the many reasons why we are in debt is that we don’t know how to say “no” to our family and friends. If you want to be able to free yourself from debt, it is high time that you say no to unnecessary spending, especially when funds are tight.
Parents should teach their children the difference between getting what they want versus what they need. If they want to hang out with their friends, why don’t you suggest that you go for walks in the parks?
Telling them your current financial situation will help them understand that money is tight and that you are curbing your expenses.
7) Consult a financial expert or adviser
There are some people who cannot address the hole in their finances on their own. And if these steps haven’t helped stem the flow of money going out, talk to a financial adviser.
A financial adviser will help figure out how to reduce your debt and even talk to lenders to come up with a payment plan that will work with your current finances.
They can even assist you in consolidating your loans to make it easier for you to pay them off on time. This is important especially when you have big loans such as mortgages in place.
It is not uncommon for us to worry about our finances from time to time. But if you want to free yourself from the stress caused by your money, assessing your current finances and making plans on how to stretch your salary can help.
It would be beneficial if you discuss your financial problems with the rest of the family so they too can add to the solution. And if you feel that your efforts aren’t making any headway, seeking the advise of a financial expert will be worth it.
Photo by Ümit Bulut