Feeling financially secure is something that everyone strives for. In the UK, the average household had a debt of £65,143 at the end of April 2024. Whilst this is a large amount, debt of any size can have an impact on your mental health.
Whilst it can feel difficult at times, getting in control of your finances with careful planning and budgeting is achievable. Here are some tips to help you find and maintain financial health.
Create a realistic budget
Before you can begin to recover you must be realistic about your finances. Set some time aside to look at your last six months’ worth of bank statements.
Make a spreadsheet of two columns. One side should be incoming to note your wages, any benefits and any other income. The second column should be a list of all your outgoings such as mortgage or rent, food, entertainment and subscriptions. You will then be able to identify any areas where you can make some savings.
Build an emergency fund
Once you have identified where you can cut back you can start thinking about starting an emergency fund. Use a separate bank account for this – you can get some with great interest rates provided the lump sum isn’t touched often.
Even if you manage to save £20 per month, that works out to £240 without interest. If your washing machine were to stop working, for example, this would be a good chunk of the cost of a replacement accounted for without you worrying.
Manage your debts
Debt is such a taboo topic even though most people have some form of credit owing. From mortgages to payday loans, debt is common.
When you are looking to get your debts repaid consider the interest rates. Having high-interest loans looming over you means you will end up paying more in the long run as the interest will quickly accumulate.
Remember to communicate with your creditors. By ignoring the issue you will make the situation escalate. Be clear about your financial situation with them and see if you can come to any arrangements.
If having multiple repayments feels unmanageable then look into debt consolidation loans. This option brings all your debts together and leaves you making one affordable monthly payment instead of multiple ones each time.
Regular financial reviews
Once you have put the hard work in to understand your finances try not to let it slip. You don’t want to have to repeat the process all over again in a year or so.
Get into the habit of going over your bank statements and making sure everything is in order monthly. This may help you notice any errors or double payments and allow you to get them rectified quickly.
