What do your finances look like? When was the last time you took a good look at what you spend your money on? Wherever you stand, salary-wise, having the knowledge and skills to successfully manage your finances can be beneficial both for now and for the years to come.
As well as giving you the chance to create a stable system for managing your money, by having a firm grasp of your finances, you can improve your wellbeing. By avoiding looking at your bank statements and not taking control of the situation early on, you could find you don’t know how to deal with cashflow problems. And these problems can lead to stress, in turn impacting on your life and the lives of those around you.
So, what can you do to take charge of your money? Here are some top tips to help you improve your financial education.
1. Set a budget and start saving
Do you have any savings? If not, you’re not alone. According to comparison site finder.com, one in 10 Brits have no savings at all and a third of us have less than £600 saved up. Having a rainy day fund can be the lifeline you need should the boiler break down or you spring a leak in your roof and it needs fixing.
To save effectively, you’ll need to take a look at your bank statements for the last six months. If you can access any from further back, even better. Assess your incomings and outgoings and make a note of areas where you might be able to save. For example, might it be time to switch energy supplier? Could you move your weekly food shop to somewhere cheaper?
By budgeting in this way, you can begin to put the money you save into a savings account. Even if it’s just £20 a month, after a while, you’ll soon start to see the money add up.
2. Managing a mortgage
Perhaps you’re renting and want to get onto the property ladder. To do this, you’ll need to understand how to save for a deposit, how much deposit you’ll need, and the different schemes that the government can offer you.
There is the Help to Buy Scheme: an equity loan, where the government lends you 20% of the cost of your new-build property. If you’re a resident in Wales, there are further schemes to be aware of, such as Rent to Own and Homebuy.
Whether you opt for any of these schemes or not, there are a few expenditures to be aware of when buying, such as stamp duty, conveyancing fees, search fees, and the cost of surveys. It’s important that you speak to other who have bought property in recent years and get as much advice as possible so that you know exactly how much money you’ll need to cover the costs, as it doesn’t end when you’ve saved your deposit.
Work out how much these additional costs are likely to be before you buy anything and make sure you over-estimate for things like removal costs so that you’re more likely to have savings ready for other things that may crop up. For example, if you want to buy a property that’s in a flood risk area, you may need to pay for indemnity insurance. Having funds set aside just in case can be helpful here.
3. Investments and forex
Investing in foreign exchange and currencies can be hugely beneficial to you. Whether you want to take the step into the world of trading and use some industry-level tools to do it or you simply follow the markets to see how the economy is performing, the skills you pick up can help you manage your finances better.
This gives you an opportunity to gain an understanding of things like the impact of inflation on wages, how tourism plays a vital role in the economy, and it may even get you interested in trading in cryptocurrencies. These basic investing principles provide transferable skills and can help you in the long run.
A solid financial education is something that can form the basis of how you manage all aspects of your finances. It’s never too late to start learning, either. If you follow any of these tips, you could find that you fall into better money habits and avoid getting into debt.