There’s a significant focus on debt across the board in the UK at present, particularly with the region’s debt-to-GDP ratio thought to have exceeded 100% as a result of the coronavirus pandemic.
Personal liability remains a significant issue in the UK too, with the average total debt per UK household estimated to be £61,435 as recently as March 2021.
Debt can be extremely challenging for households to manage, while it’s also easy for financial liabilities to accumulate rapidly over time. So, here are some ways in which you can improve your personal finances going forward.
- Start Budgeting
We’ll start with the most basic measure; which is to budget your finances and gain a clear insight into your incomings, outgoings and the precise amount of disposable income that you can access on a weekly or monthly basis.
The key here is to deal in pence rather than pounds, as this affords you access to accurate information that can lead to more informed financial decisions over time.
At the same time, this helps you to identify precisely how much disposable income you can spend or commit to savings during specific time periods, improving your financial prospects considerably in the process.
You can do this through an app too, as this enables you to sync different accounts and manage your finances more efficiently in some instances. Mint offers a relevant example, as this also allows you to track your everyday spending and access further insights.
- Set Goals and Boost Earnings
Another proactive step is to set clearly defined financial goals, which are also manageable and aligned with your core fiscal objectives.
It’s also important to set clear time-frames for each individual objective, so that you can track your success or failure and draw practical lessons from your experience over time.
This makes it easier to achieve your goals, while it may also highlight key issues such as a relative lack of earnings. This may encourage you to begin a process of optimising your earning potential, by establishing a viable side hustle and passive streams of income.
Trading forex offers a relevant and profitable case in point, as international currencies can be traded as derivatives and through platforms that allow for considerable automation.
- Pay Off Your Debts
We spoke earlier about debt, which can be exceptionally difficult to repay when you factor in interest rates and late payment charges that can accumulate over time.
Such factors combine to create a never-ending and constantly increasing cycle of debt, which is impossible to repay and likely to prevent you from building financial security (and a good credit score) over time.
So, it may make sense to begin paying off your debt as a leading priority, by committing as much of your capital to this endeavour as possible and potentially eschewing savings for a small period of time.
This can help to reduce or eliminate payment fees and your monthly outgoings, boosting your long-term levels of disposable income and the amount that can be saved or invested in the future.