Five top tips you can make right now to improve your financial position.
Interrogate your fixed costs
Yes, the cost of gas and electricity is rising at an unprecedented rate so, whilst you cannot control the supplies of gas, you can influence other seemingly ‘fixed’ costs. Don’t let insurances renew ‘unchallenged’ – there are nearly always cheaper deals available on a like for like basis. The cost of our TV, broadband, landline and mobile phone packages are always up for renegotiation and transfer, as necessary. Look at the best deals available particularly on these core expenditures including on debt like mortgages and loans. You may be able to lock in to some great deals! The cost of the family shop at Waitrose becoming obscene? Try Aldi and Lidl to help soften the blow. This ‘cost interrogation’ can really help, there is no better time to do it and having done this myself recently I know it can work.
Start budgeting and track spending
Remember, your monthly salary is not an ‘expenditure target’. Take a look at bank statements and evaluate where your money goes. Quite often you are paying for things you no longer use, have long since forgotten about, could easily find more cheaply or that simply could be cancelled. Businesses prey on this ‘consumer apathy’. You might find that your monthly Uber bill or Deliveroo costs are getting out of control. Facing these realities should help you change engrained behaviours and get you out of that ‘spending cycle’.
No, not the house, car or the dog (although they should be too!) but yourself. if Covid-19 has taught us anything it’s that life can be fragile and fleeting. Make sure that your loved ones and those that are financially dependent on you are secure should the worst happen and you become ill or die prematurely. Also ensure that your income is maintained to provide you with peace of mind if you are unable to earn it yourself and the provisions of your contract are non-existent or lack coverage. It’s all too easy to wish you had done this at a point where you no longer can.
‘Sweat your cash’
The inability to spend money during the various lockdowns we endured at the height of the pandemic saw the level of savings in the UK soar. Much of this money now sits in current accounts or old deposit accounts paying little or no interest. Now, I appreciate interest rates are where they are but some small changes to the way you think about how and when you need your cash and how you save – maybe even the use of a ‘cash management service’ – can help you treat cash more as an asset and less like a wealth store. Some wider thinking can increase the interest you receive on passive money with no increase in risk at all, and in some cases an actual reduction or elimination of risk. Will this change your life? Possibly not. But it could help pay for the annual holidays, offset the costs of utility bill rises or provide a significant ‘dent’ into the cost of childcare or educational costs.
Set SMART financial goals and expectations
No, you are not flexing your financial acumen but rather getting clarity on a set of goals, objectives or ‘small wins’ that are – Specific, Measurable, Attainable, Relevant and Time Bound. You want to pay off that Covid loan you took out to tide you over when things were at their worst? Then work out the steps you need to take and most importantly, how you will take the first step. Calculate it – to pay it off by say June 2023, I need to make a monthly payment of x. Can I afford that? Once I’ve achieved it, I get that extra in disposable income or for other savings. Small wins can have big positive consequences.
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