Image Pixabay CC0 License
Many people have a problematic relationship with money. Some people struggle to control their spending, while others hoard their cash and worry about spending anything at all. Developing a healthy relationship with money is vital to taking control of your finances and taking charge of your money, rather than your money controlling you. Good financial habits can bring rewards. Not only will you be saving more money and building less debt, but when you do apply for credit or a housing loan, you’ll likely benefit from preferential rates, reducing your overall repayments.
Financial Health Check
If you are someone that tends to shy away from thinking about your finances and has a passive attitude toward your money, it is time to change! When it comes to your hard-earned cash, ignorance is not bliss. You worked hard for your money, so why not make sure that it works equally hard for you?
Being proactive with your finances is vital if you want to take control of them and ensure that you are not wasting your cash. Setting aside a morning to give your finances a health check is time well-spent. Calculating exactly how much money you have coming into your account each month, and how much your outgoings are will give you a strong idea of exactly how much money you have to play with each month. Being fully aware of your financial situation will help you to find solutions to improve it, and will benefit your long-term financial health.
While going through your finances in detail, you will probably find ways to save money right away. Regular payments for services and subscriptions that you no longer use need to be dealt with, as you are throwing this money away. Before you cancel the payments, be sure to check that you will not need to pay early cancellation charges.
Spending
Are you a saver or a splurger? Even if you are a saver, the chances are that there are many more savings that you could be making. Changing your suppliers for your most significant outgoings such as gas and electricity, can make a vast difference to your finances. A little time spent shopping around and comparing the best deals can mean big savings on your monthly outgoings.
Many people find that closely examining their finances can come as a shock. There are usually a few spending habits that come as a surprise. These surprise spending habits could be how much you spend each month buying fast food or your daily takeaway coffee. Once you know how much you spend, you can decide whether to cut back and save the money instead. Simple swaps such as making your coffee-to-go at home before you leave the house, or learning how to cook a fakeaway rather than ordering in can save you significant amounts over the course of a month.
Changing your spending habits can feel daunting at first, but you will soon get used to it, and enjoy seeing how much extra you can save each month.
Image Pexels CC0 License
Savings
Saving money is great, but you need to make sure that your efforts count. Make sure that money you are saving on your outgoings doesn’t simply get frittered away, or absorbed into your bank account. Try setting your savings aside to prevent this from happening, and don’t leave them in your regular bank account.
Everyone needs some savings to fall back on, so having a rainy day fund is essential. Without a rainy day fund, unexpected bills can cause so much stress. If the car needs urgent repairs, or your boiler suddenly stops working, you need to know that you get these issues sorted without sending yourself spiralling into debt. Having some money ring-fenced for a rainy day enables you to be prepared for whatever life throws at you.
As well as setting up a rainy day fund, it is vital to start saving regularly for the future. The only exception to this rule is if you have a lot of debt, in which case, you may be better to focus on repaying your debt to start with.
Saving money doesn’t mean that you need to plough every spare penny of cash into a savings account. Even saving smaller amounts of money each month can add up to a big difference over time. Many people find it a wise idea to set up a standing order for their savings to move their savings money from their current account into a separate savings account. Trying to remember to transfer the funds across yourself each month can be tricky, and if you forget your savings account will be down.
It is crucial to remember that not all savings accounts are equal. There are many different savings accounts to choose from each with their pros and cons. Before you set up any old savings account, make sure that you do your research to find the best rates available. You want your money to work as hard as possible for you while it is sat in the savings account, so taking some time to find the account that will help to make that happen is well worth it. When choosing a savings account, you will also need to consider whether you will need to have easy access to your money. Some of the saving accounts that offer the best interest rates do not allow you to access your money quickly, so this is an important consideration.
Investments
If you want your money to work hard for you, then investing it could be the answer. There are many different types of investment available, each with varying levels of risk involved. Thinking about how risk-averse you are is essential when deciding on the best way to invest your money. Generally speaking, higher-risk investments offer the most significant potential for big returns, but of course, could also create the largest losses. Lower risk investments may not bring big rewards, but if you would like to invest cautiously, they will give you greater peace of mind.
You could build up an investment portfolio by acquiring assets in various asset classes or stick to just one. Popular investments include shares, foreign exchange, and commodities. Make sure that you do your research if you need help to pick a company to manage your investments as there are many different service providers available. It pays to be cautious when choosing a company to manage your investments, as an unreliable or unscrupulous broker could result in you losing your money.
Another popular investment choice is the property market. Investing in property requires a strong knowledge of the local property market and an understanding of how it is performing. You could choose to invest in a property that you can renovate and then resell quickly for profit, or keep hold of the property as a long term investment and gain rental income from it.
Side Hustles
So far, you have seen the many ways that you can take control of your money, manage it more effectively and make savings. However, you may be wondering how to increase your wages to give your bank account a boost each month.
Side hustles are extremely popular right now. It seems like everyone has a business venture on the go. Side hustles offer a fantastic way to make extra cash on top of your day job, and can significantly improve your financial situation. Taking on a side hustle is a great solution if you want to boost your savings account, pay off debt, or save towards a big purchase, such as a car or a holiday.
To make your side hustle successful, you need to be prepared to invest lots of hours of your spare time. As you are going to be spending so much of your time working, and have very little free time, it makes sense to choose a side hustle that you enjoy.
If you are struggling to think of a side hustle idea, you could consider turning your hobbies or skills into a side hustle. For example, if you love drawing, why not try selling some of your artwork to see if this could be a viable side hustle for you. Try to stay motivated and persevere, even if things get off to a slow start. Taking on a side hustle can be a steep learning curve, but is often well worth the effort in the end.
Before you start your side hustle, there are a few things that you will need to consider. Firstly, you need to make sure that your day job allows you to have a second job. Some companies are reluctant to let employees take on extra work outside the company in case it impacts on their work performance, or they try to steal customers from the company. Secondly, you need to think about how taking on a side hustle will affect your tax bill.
If you approach your side hustle in the right way and are prepared to put in the necessary hours to make it work, you can reap big rewards from your efforts. Some people find that their side hustles are so successful that they leave behind their day jobs and make their side hustle their primary source of income.
