If you’re busy looking for ways to manage your finances better, you’re not alone. Soaring energy bills have led to grim predictions for the coming years, with the average household income expected to effectively drop by 10%. But while there’s not much most of us can do to tackle the larger economic problems at hand, there are still tweaks you can make to your personal finances that will give you more control.
At the very least, understanding what money is coming in and going out – and having a broader plan – should help you make decisions with more confidence. Here are five ways to start improving your finances right away.
Start budgeting
A budget is a plan for how you’ll spend or save your money each month. If you don’t already have one, now is the time to start.
Jot down your income alongside your committed expenses, like mortgage or rent payments, utility bills and so on. Take away the latter from the former and you’re left with what’s called discretionary income, which you can start allocating to categories like food, socialising and travel.
Set up automatic payments
If you struggle with paying bills sometimes, setting up automatic payments will save you the risk of forgetting each month.
Consistently paying bills on time is an effective method for boosting your credit score too. It’ll come in handy if you ever want to get a mortgage, take out a loan or even use a credit card.
Cut your outgoings
With some predicting inflation to peak at 18.6% in early 2023, you’d be wise to reduce your outgoings where possible.
The best options will be unique to your spending habits but could include cancelling unused gym or TV subscriptions, cooking at home more, and choosing cheaper travel methods.
Build your savings
Not everyone has the luxury of being able to save right now. But if you do, creating clear savings goals is a great way to start building up your cash reserves.
You might include short-term goals, such as an MOT, plus longer-term goals like a house deposit. Both should help you work out how much you need to be saving each month.
Educate yourself
Finally, a great way to make all the above clearer, as well as understanding topics like investing, is to start actively learning about personal finance.
After all, we don’t learn much about it at school. But there are plenty of great resources out there, from articles and videos online to open conversations with friends and family.
Could you implement any of these changes to improve your personal finances today?
