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How to Take Control of Your FinancesJune 27, 2018 - Financial Articles
According to the Office for National Statistics, the average UK household owes £12,887 in debt. While this can seem like a daunting reality, the truth is that with the right steps, you can take control of your finances and ditch debt. Keep reading as we guide you the steps you can take to take control of your money, earn additional income and plan for the future.
How to take control of your finances:
1. Examine your expenses
To take control of your finances you must first is understand exactly how much spending money you make verses how much money you spend. Take a close look at your financial situation. Weighing your incomings versus your outgoings and putting pen to paper can provide a lot of clarity.
Take a look at your bills in the past few months to establish a spending pattern. Ideally, your expenses should never surpass your income. It’s alright if you have had a few months where you have spent too much money, now is the ideal time to get back on track.
With your previous billing statements in hand, determine the necessity of your purchases. Make a list of the absolute essentials such as: housing, transportation, absolutely essential monthly bills, monthly expenses and groceries.
For the remaining non-essentials, Certified Financial Planner Ellen R. Siegal encourages people to determine what purchases were associated with being HALT. HALT are the four most common emotional spending mistakes: hungry, angry, lonely or tired. When you identify these non-essential emotional spending habits you can make more conscious purchases in the future.
2. Tackle your debt
No matter how much debt you have, do not be disheartened, you can always take control of your finances. Follow these two steps to tackle your debt:
a. Get your free credit report: Review your free annual credit report and be sure that all of its records are accurate. You may find an old bill that needs payment you forgotten about. Keep a keen eye as mistakes occasionally do happen and a bill you paid off may still be listed as unpaid. You can dispute any mistake that you find.
b. Pay your credit card debt: If you have multiple credit cards, focus on paying off the card with the highest interest rate while making the minimum payments for the other cards. Once you have completely paid off the first card, continue this process with your remaining cards from highest interest rate to lowest.
3. Create an action plan
Now that you know how much your expenses are and how you will begin to pay off your debt, you are ready to formulate an action plan to take control of your finances. Start by taking note of your expenses so you can identify your spending habits. You can keep track of all expenses in a notebook, Excel sheet or with apps like Quicken or Mint that will do the work for you.
Next, determine what monthly payments you can cut back on such as an unused gym membership, dining out or cable. There are plenty of cheaper alternatives such as working out at home, packing lunch and subscribing to streaming services such as Netflix and Hulu which cost a fraction of cable.
With your expenses streamlined, it’s time to set up automatic saving accounts. You should have an account for general savings, emergency funds and retirement savings. Don’t worry about having to fill all of these accounts quickly, that is not a realistic goal. Even if you only put away £20 a week, that will quickly add up to over £1,000 in a year.
If you decide to put your credit card payments on autopay, ensure that you have enough funds in your bank account or else you will incur an overdraft fee. You can set up bill reminders so you always have enough time to check your funds. You can also create saving challenges for yourself to help you stay on track such as:
- One Week At A Time: Having a no-spend week where you do not spend any unnecessary money
- Small Savings: Putting away every £5 note you receive in change or saving a pound a week and watching your coins add up
- Lunches: Packing lunch for work for a week
Even with the best of intentions, staying financially on track isn’t always easy. However, when you set financial goals you can have the motivation to take control of your finances. These goals might be paying off student loans, buying a car or funding a holiday.
4. Earn additional income
Don’t forget, taking control of your finances is not just about learning how to save money and cut back expenses. By earning additional income you will have an easier time meeting your financial goals, ditching debt and increasing your savings. While there is no such thing as free money, there are no shortage of tasks you can do to earn extra money, some popular options include:
- Becoming a Virtual Assistant: With websites such as Priority VA, you can help an individual or business with administrational tasks such as answering emails, transcribing data and bookkeeping.
- Selling your Pictures: If you are a lover of photography you can sell your pictures to stock photography websites such as Shutterstock or Adobe Stock and earn royalties with each customer purchase.
- Tutoring Online: With websites like TutorMe you can get paid to privately tutor people on your favourite subjects around your own schedule.
- Taking Paid Surveys: There are plenty of websites that will let you earn more money for each survey you complete such as Swagbucks.
- Sell your Clutter: By selling things that you no longer love you, can de-clutter your home while earning cash. For general clutter like clothing, decorations, games and appliances you can put up ads on websites like eBay and Craigslist. But for high value items like loose diamonds, jewellery and luxury watches you need to work with a reputable specialty buyer such as WP Diamonds.
How to sell your jewellery, luxury watches and handbags
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Selling your loose diamonds, jewellery, luxury handbags and watches with us is entirely free, secure and so fast that you can receive funds in as little as 48 hours after completing our simple online form. Click the button below to get your price quote today and receive the funds to help you take control of your finances.