Tuesday, February 19, 2019

No More Financial Fiascos: It's Time to Get Your Mind on Your Money


Are you forever counting down the days until Payday- borrowing from one person
to pay another and essentially living a ‘hand to mouth’ existence? Not only is this no
fun whatsoever, but it also puts you in a vulnerable situation. One unexpected bill
or expense could leave you basically homeless, lead to severe debt and generally
leave you in a whole heap of trouble. Here’s how you can protect yourself from
fiascos with your finances.

Get out of debt
Debt is expensive. You never just pay back what you borrowed, you’re always hit
with interest rates too (it’s how credit companies make their money, afterall) and
this interest can cause your debt to spiral. Every month that you carry a balance and
only pay the minimum payment back, your debt increases. It can get to the stage
where you’re only just keeping your head above water by making small payments,
and these get ‘sucked up’ by interest meaning the balance never actually goes down.
If you want a secure financial future, you absolutely have to get out of debt. If things
aren’t manageable then speak to a debt management company. They will be able to
recommend a debt management plan, an IVA or bankruptcy depending on your
situation and how much you owe. From there, interest will be frozen and you’ll pay a
set amount that’s affordable to you, until the debt is paid or you’re discharged
(depending on the route you take). Cut up your cards so you have to stop spending
on them, and don’t take out any more credit. Then, add up what you owe. It can be
a scary step, but a debt company or charity will walk you through everything and it
gives you the opportunity to get back on track.

Set a budget- and stick to it
Once you’re out of debt or paying back an affordable monthly amount, the next step
is to set a budget to stop this from happening again. A good tip is to open a bank
account that’s separate from your main spending, and is just for bills. Set everything
to come out by direct debit, and then work out how much everything comes to. That
way, each time you get paid you can transfer enough to cover your bills, and from
there they essentially take care of themselves. You don’t accidentally spend back into
bill money, and if you transfer a little extra each week or month you can create a
nice buffer. Make this transfer to your bills account first each time you’re paid, and
from there you can budget the rest, knowing that your important outgoings are covered.
With what’s left you’ll need to account for food, fuel or travel costs, socialising and
any little luxuries you treat yourself to. Ideally you’ll be putting some away to savings
too if you have any left.

Improve your career
One of the best ways to improve your financial situation long term is to improve
your career. If you’re stuck in a dead end job with no progression then your wages
are always going to be fixed. Changing jobs can be scary, it can even mean a loss
of earnings in the beginning- as you might have to study full or part time, or go into
a lower paid role to begin with. But if it allows you the opportunity to work your way
up then it’s worth going for it you can make it work at the start. Improving your
career could mean going back to university for three years in a related subject, or
just doing an online college course in your spare time. You could advance in what
you’re doing now, or look into changing fields completely.

Start a side hustle
A side hustle is a way to earn money in your spare time, doing something you enjoy.
If you have a hobby, look into ways you can monetise it. Do you have a craft you’re
passionate about- it could be baking, candle making, art or design? Look at ways you
can sell the end product. Another option would be to buy and sell things for a profit,
you can find good deals at wholesalers and then resell them, earning a little each
time. It’s a tried and tested business model and you don’t need any special skills to
be able to do it. It helps if you purchase items for your little shop that you’re interested
in, that way you have an understanding of the products you’re selling. For example,
if you’re interested in makeup you can find discount cosmetics and you’ll know the
best ones to pick that others are most likely to buy.

Make smart investments
Once you’ve managed to save some money through your improved career, side
hustle and better budgeting, it’s worth putting that money to work. Instead of it
sitting in a savings account, do some financial services research and find an advisor
who can make the most of it for you. This will earn you passive income, essentially
‘money while you sleep’ which is a good long term strategy. Whether you want to
cash it out in a few years and use towards a mortgage deposit or you want to retire
early, it’s something to look into.

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