Multi award-winning Chartered Financial Planner, Certified Coach, author of The Money Plan, and Sunday Mirror columnist
It’s time to get serious about your money… The cost of everything has increased, yet wages and pensions haven’t kept up. It’s tough out there.
Therefore it’s essential you know your numbers – money isn’t as complicated as you might think. Clarity gives you the ability to make better decisions and live the life you want to live.
We can’t put life on pause because the economy is out of whack. I often refer to ALIE as every financial planner’s best friend: assets, liabilities, income and expenditure. The hardest step is the first one – so where should you begin?
Get organised
Start by working out what’s coming in and what’s going out. If you’re struggling financially, or anticipate you will be soon, it’s so easy to bury your head in the sand and ignore the problem. It’s also the worst thing you can do.
List all of the money coming in and going out every month (some of the online-only banks can automate this process for you) so you know where you stand. You might even find direct debits for things you stopped using long ago.
Look through credit card statements – regular payments made by a credit card can often be missed when you review your expenditure, make sure you include these too.
Next, look at what you owe and what you own. If you’ve got outstanding debts, write them down. Make sure you’re on the lowest interest rate you can get by contacting any credit card providers.
It’s fair to expect interest rates to start to reduce, therefore your borrowing costs may also reduce. Take this opportunity to review the market and consider a better deal.
Finally, don’t forget to organise what you own, including which companies your pensions are held with.
Cut outgoings
Go through each item of expenditure and ask yourself three things: Do I need this? Do I want this? Can I get a similar experience for less?
Unless you plan to rely on savings, you’ve simply got to have more coming in than going out. If you’re taking a financial hit at the moment, that might mean making tough choices and some cuts you don’t want to make.
Your TV subscriptions might need downgrading, or that phone upgrade might just have to wait. Also, consider reviewing your energy bill and fuel costs. I regularly look at the price of the electricity I use and I shop around to get a better deal.
Remember, if you’re struggling, this period doesn’t have to last forever; it’s to get you through this difficult time until you’re back on an even keel.
Increase incomings
At the same time, think about any ways you can improve your earnings. Thanks to the likes of eBay, Vinted and Facebook Marketplace, it’s never been easier to sell unwanted items online…even my 18-year-old daughter sells her unwanted clothes on Vinted and Depop, I am sure you can too.
If you’re on a modest income, have lost your job or have children, it may be worth checking out the website entitledto.co.uk to check your eligibility for any benefits. It’s a great resource that may surprise you.
And you could also consider any online training or upskilling you could do to improve your salary in the future, or returning back to full-time education using the Advanced Learner Loan at gov.uk/advanced-learner-loan.
If you already have a skill, you could consider a side hustle using sites like fiverr.com or upwork.com.
Armed with information, you can improve your financial position and make it through the storm, you may decide to carry on your new habits to build the financial future you desire.
- For more money planning ideas search for The Finance Geeks podcast
