Personal finance and budgeting tips from a financial advisor
Whilst financial advice mostly consists of investments, mortgages etc, personal finance is something that effects all of us. When you take out a loan to buy a car, or how much you spend on the weekly food shop. All of these small decisions make up the bulk of how you spend your money. Are you doing it wisely though? We are going to look at some personal finance and budgeting tips that may help you save monthly and better organise your finances.
Let’s take a look at 5 tips we have that can help improve your personal finance and help you make the most out of your money.
#1 Shop around for credit cards that are either 0% or as close to this as possible
Paying interest on credit cards is the least desirable situation you can get to. Some cards have extortionate annual percentage rates (APR) which really need to be avoided at all costs. With websites like money supermarket and compare the market you can look at a vast range of cards at the simple click of a button.
With this technology at our finger tips, there is no reason to fall onto high interest rate cards when we don’t need to. Obviously these cards are subject to a good credit score but if looking for them only takes a matter of minutes, there is no real reason to fall foul of interest rates.
#2 Plan out your budget using a spreadsheet
One of the main bits of advice that not a lot of people use is to spreadsheet your in goings and outgoings. Life is a whirlwind, money going in, coming out, going here and there. But where is it going? The easiest way to actually visualise this is to spreadsheet your income and outgoings. Simply make two columns, one that details all of your income and another that details all of your outgoings.
If there’s cards and loans in there, put the date you’d hope to clear them by or when they finish so you can see into the future of your budget. This way you know exactly how much spare money you actually have to play with each month and then can spend from a position of knowing rather than guessing. Clarity in this space gives you peace of mind. It will help you drastically to plan for future financial events such as getting a mortgage and buying a home.
#3 Look at investing your savings
If you look at all of the money you earn as workers going to work for you, how hard are they working in a low interest savings account? Not very hard. With the current Bank Of England rates so low, savings accounts are paying out such small amounts that you are actually losing money with current inflation levels.
One of the best ways to make your savings go further, is to invest them. Yes, there is risk with investments, no investment can carry a 100% guarantee of return. But with a professional managing your investments, and good risk management, you stand a great chance at making a lot more than you would with a savings account.
#4 Don’t be too hard on yourself
Living within your means is a key part of insuring financial stability. But some people can take this too far. There is no need to be ultimately cruel on yourself and live a frugal life if your budget does not justify it. At the end of the day life is to be enjoyed and most enjoyable activities cost some form of money. This is one of the personal and financial budgeting tips you won’t hear too often. Restricting yourself so much that you don’t have a social life is not going to play well on your mental health. In turn you then may not be as focused and committed to earning the money that your budget needs. Everything in life works in swings and roundabouts so don’t be too hard on yourself financially.
#5 Try to buy with cash or use annual premiums where possible
It’s not always easy to come up with all of the money up front. But what it does do, is save you in the long run. Car insurance policies and building and contents insurance often give you the choice to pay annually or monthly. Generally speaking, paying annually costs about 85% of the monthly premiums if you added them up to a monthly sum. Already, you are saving money from the outset.
Another idea to take into account would be buying a car or a bigger purchase, with cash. The more you can buy with cash the less interest you pay to banks and building societies who make a living from charging retail customers interest payments. Buying something outright negates interest and means you own it wholly. It won’t always be easy or realistic, especially with property, but it will save you money in the long run.
Making the most of the money you have
That concludes five personal finance and budgeting tips just for you. We hope they are useful and you take something from them. If you’d like to speak to us about any of it, please just get in touch for some professional advice.
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