How To Manage Your Money
We often find that we have run up a bad credit score when it’s too late. Maybe we’ve mismanaged our money in some way – like overspending or indulging themselves on a holiday we couldn’t really afford or can’t resist a new car model that came with an appealing finance package. Whatever the reason, we can all take steps to manage our money better.
Money Control And Management
It might not sound like the kind of subject you would want to study at university, but controlling and managing your money is the biggest it can take in improving your credit rating. This in turn makes you more appealing to potential lenders when you come to consider a loan in the future.
Tackle Your Personal Finances
If you’re the kind of person who keeps a meticulous record of all your spending and receipts, you’re probably not going to need these tips. However if you’re like most people, who have a vague idea about how much money they’ve got in their current account and what money they owe, you might like to read through the steps to get a few tips about better personal finance management.
Keep A Record
Keep a record of what you spend every day so that your contract with your expenditure on items such as food and drink, clothing, travel costs, entertainment, etc. There are a variety of computer programs and apps that will enable you to do this easily and quickly.
If you keep a record for a month or two, you will quickly be able to see where your spending is wasteful. You might find your spending lots of money on unnecessary coffee out or gym membership that you don’t use or comfort purchases such as cakes, ice creams etc.
You’ll be amazed to see how many times a muffin in your local coffee bar appears on your list of receipts or a sausage roll at lunchtime. These kind of items quickly add up and can account for a sizeable amount of money over the course of the year.
Interrogate Your Current Account
Look through your bank account in detail and see which standing orders or direct debits are due to be paid. Examples include council tax, mortgage payments or rent, utility bills, pensions or Life Insurance. These are all usually large payments.
If you have a handle on what kind of expenditure you will be making during the course of the weeks and months ahead, you will be able to budget for it and you will find that you will be able to anticipate any potential shortfalls in money. If you can anticipate problems you can prevent them from happening.
Create A Weekly Spending Plan
Once you have an idea of your daily expenditure and likely outgoings, you should create a weekly spending plan that you should stick to. You will know exactly how much money you can spend.
Pay Off Your Credit Card Bill
Try to pay off your credit card bill in full. Not only does this improve your credit rating, but also means you won’t incur any interest charges on the balance. If you can’t afford to pay it off, try to pay off as much as possible in order to minimise the balance and therefore minimise the amount of money you owe the credit card company next month.
You could consider replacing your credit card with a prepaid card that might give you greater control over managing your money.
In the future, try to discipline yourself to spend money on items that you can afford to pay off within the next month.
If you can afford to overpay a little bit on your mortgage payments every month, you will save yourself many thousands of pounds in the long term. So if you have been able to stick to your weekly spending plans, and made sure that you have lived within your means, you might find that there is a little surplus money left over at the end of the quarter. Try and use this to overpay your mortgage or add to some other tax efficient savings.
There are often a number of payments that are made annually such as car insurance, house insurance, etc. Make sure you budget for these when they are due to be paid so that you will have no nasty surprises, and end up in debt.
You should look to consult with a financial adviser about what kind of long-term investments you could be making. Once you have your spending under control and have a good credit rating, you may find that you have extra money that can be used to create a pension or savings investment from which you can benefit in the future.
A good financial advisor will also help you with your budgeting and may be able to recommend different kinds of bank accounts or savings vehicles that will enable you to be more financially proficient