Almost a month into the New Year, now is as good a time as any to take stock of the promises we made ourselves when we declared our New Year’s Resolutions. How’s the diet going? Still hitting the gym four times a week? Still cooking more and getting fewer takeaways? Fantastic! How about finally getting your finances in shape? Ah, I see. Not to worry. The year is young and there’s plenty of time to turn things around. Making our finances healthier can take far more time, effort and discipline than melting away the pockets of excessive wobbliness that we vow to banish when the New Year rolls around. Fortunately, there are a plethora of ways in which even the shabbiest household finances can be rectified.
Let’s take a look at the ways in which you can keep your finances healthy in 2019…
It all starts with a budget
When it comes to rectifying your finances, your budget is your foundation. Trying to take control of your household finances without a budget is like trying to build an impenetrable fortress on a foundation of sand. Healthy finances start with accounting for every penny that comes into and goes out of your bank account. Very often it’s not the huge expenses that cause your finances to fall into disarray but the little costs that seem innocuous enough on their own but quickly add up. The latte you get from Starbucks to take the sting out of going to work on monday morning, the fast food you get on your lunch break for “fat Friday” or the pizza you get in because you don’t have the energy to cook. Establishing a firm budget helps you to take control of all these little costs. The Huffington Post has some useful budget templates which will work so long as you stick to them.
Take control of your debts
Household debt is nothing to be ashamed of. Indeed, for most it’s an inevitability in the post-crisis economy. However, we have a tendency to bury our heads in the sand when it comes to our debts. And when that happens they tend to spiral out of control. Good financial planning comes not just from avoiding debt but taking control of the debts you have, but also prioritising your debts so the most costly debts are paid off first.
Credit card debt can be a persistent pain but it is one of the easiest kinds of debt to tame. Simply keep moving your debt to a new card with an introductory 0% interest rate on balance transfers. When the introductory rate expires, simply move the debt again. And try and get out of the habit of selecting the minimum monthly repayment amount. It will only prolong the debt.
If you have multiple debts with different interest rates all coming out of your account at different times this can be inherently stressful. It may be worth using a debt consolidation loan. This will make your debt much more manageable as you get a single monthly repayment and a consistent interest rate. It can even improve your credit rating, too.
Adopt a minimalist approach to spending
Another way in which many of us find our finances spiralling out of control is that we treat shopping and spending as leisure activities. If your idea of a Saturday afternoon is to take the family to the local shopping centre to buy some nice clothes and treat yourselves to a fancy lunch this won’t be doing your finances any favours. Find more cost effective ways to spend a day out with the family. And when it comes to spending try to adopt a more minimalist approach says Dave Beard at comparison website Lending Expert.
Most of the time we fill our homes with stuff that we don’t need. It gives us a giddy little thrill when we buy it, sure, but the thrill doesn’t last and our treasured new possessions quickly become clutter. Before making any purchase ask yourself.
- Do I really want it?
- Will I use it regularly?
- Will it bring me joy?
- Will I still be happy to have it in 2 years?
And perhaps most importantly;
- Can I really afford it?
If you can’t afford it, don’t buy it!
We live in the “buy now, pay later” age and while this is understandably appealing, paying later tends to carry a hefty price tag. Instead of relying on consumer credit, try to avoid buying anything you can’t immediately afford. If it’s something you really want, save up for it. Which brings us to…
Find the right savings account and make it work for you
Savings are a key ingredient of healthy finance. The trouble is that many of us wither have savings accounts with laughably low interest rates and / or we simply don’t pay anything into them. Choose a savings account with a healthy interest rate and make sure that you pay something into it every month. It’s ok if you need to reduce the amount in leaner months but your savings account can’t work for you if you don’t use it!
Always be side hustling!
Finally, if your income is becoming less and less adequate to meet the cost of daily living, you can always make a little extra money on the side through a side hustle. From walking your neighbour’s dogs to using your car as an Uber in your free time or putting your spare room on Air BnB there are a multitude of ways in which you can make money in the sharing economy.
No more excuses, no more false starts. Make this the year you take control of your finances!