The thought of managing your finances is probably quite daunting, not to mention boring, but without a tight handle on your money it can very quickly run away with you and before you know it, you’re a week from payday and you’ve run out of it! This may not seem that bad, but future mortgage lenders may think otherwise, and if you want to buy your first house or move to a different property this could cause you a problem….So, what can you do about it?
Take it in bite size chunks…… First of all, dig out the last few month’s bank statements and if applicable credit card statements and go through them in detail. Create a spreadsheet and work out some basic spending columns. You can refer back to it if needed and it will come in very handy if and when you do look to apply for a new mortgage.
Examples could include:
- Debts - credit cards etc
- Utilities -things like Gas/ electric and phone, sky tv
- Social – so the takeaways, gym memberships and coffee shop spends
- Transport – petrol/bus fare etc
- Children – sports clubs / education
- Miscellaneous – the irregular spending you may have like car insurance if paid annually or the tv licence.
Once you’ve done this you should get a total spending figure per month that you can average. Hopefully that’s less than the total net income you receive every month. If it isn’t then you’ve very quickly worked out why you don’t have as much money as you’d like and then you can see areas where you can reduce spending. It could be that you spot things on there that you had totally forgotten you had.
The next section would be to look at areas where you can make that hard earned money go further as that is probably easier than increasing your monthly income! This could involve shopping at a different supermarket, moving your energy supplier or amending your phone and TV contract, even reducing the coffee shop visits. Some savings will be a lot easier to obtain than others, but it will all add up.
Another key is to look at your debt. You may need to contact the lenders, but it is important to find out what the interest rate is, how much you are paying monthly and what term is left. If you are making minimum payments, then look at trying to chip a little off every month. If you have a mortgage, the same applies. Find out if you are in a fixed rate period or are you on a variable rate, contact the lender for an up to date statement as this will detail the key points.
While you’re at it, now is as good a time as any to find out what employer benefits you have (if employed), if not what independent policies do you have in place and are they up to date. This would include pension and protection plans with your company or policies you’ve taken directly with insurers and pension providers. After all if you are in an accident or unable to work due to illness and you have insufficient protection in place, that list of spending you’ve just highlighted and more importantly your lifestyle could be in jeopardy.
Pensions and savings may not seem important now, depending on your life stage, but they are very important and it is key to try and budget for these where possible.
Lastly, there is no harm in asking for help. Seek the service of an independent expert who can go through this with you in detail, while also offering products and services that will really assist your financial wellbeing. Here at elite financial we have been offering financial advice for many years and pride ourselves on a good honest reliable service. So why not get in touch and arrange to see one of our friendly advisers.