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The Straightforward Guide to Better Finances (UK)

While in higher education, I was awful with my finances. I wasn’t taught about personal finances while in school, neither did young me view it as important. I got my first job at 16 and due to some fortunate circumstances, I was paid like an adult.

I loved nothing more than to bring my bank balance down to zero by the end of the month. Saving money didn’t cross my mind. I was in a charity shop when a £3.24 payment bounced on my card. The embarrassment of all those eyes watching me as if to say “seriously?” gave me a big kick up the backside.

The personal finance industry uses a lot of jargon. It took me so long to work it out. And now, I am simplifying it for you

It can all get very confusing. Therefore, I decided to create a simple plan for taking anyone to a place of robust financial security.

Track your spending

Have you ever checked your balance and wondered “where did all the money go?”. Money is a powerful tool, yet most people choose to go broke trying to look rich.

No matter how much you make, it is vital that you track your money. Here are some categories you should track:

Accommodation

Utilities

Entertainment – Netflix, nights out etc.,

Phone bill

Vehicle costs – monthly repayments, fuel, maintenance, insurance & parking

Insurance – home, phone etc.,

Personal hygiene costs

Gym membership

Luxury

      – Designer clothes

      – Restaurants and takeaways

      – Video games

      – Clubbing

Debts

     – Loans

     – Credit cards

Feel free to add to the list above.

Once you know where your money is going, it becomes much easier to make an informed decision on your budget.

You can track your expenses in a spreadsheet, but that takes some time, and it is easy to forget. I recommend using Monzo or Starling Bank to automatically categorise your expenses. I use Monzo to make everyday purchases and attach notes to each one.

For example, some years ago we found that each member of my household was spending at least £40 a month on sim only plans. Therefore, we switched to giffgaff and now pay £10 a month for the same number of minutes. As a result, each person ‘unlocked’ an extra £360+ per year.

Secondly, we also consolidated our entertainment expenses and reduced online shopping expenses by getting an Amazon Prime subscription. As a result, we got rid of Netflix, Spotify and our tv package. If you haven’t signed up to Prime before, take it for a test drive with a 30-day free trial.

This might seem like small steps, but trust me all the savings add up.

Every few months I review my expenses to find areas in which to cut out or consolidate. Any savings are passed into an emergency fund (more on that later). Any savings I ‘unlock’ are then passed on to an investment account with Ratesetter. At the end of the year, I take out the money from Ratesetter and add it to my emergency fund.

By conducting this budgeting technique, I have saved more than £2,000 per year.

Let’s find more ways to keep more money in your pocket.

Income

Most people view income as static. They work for a set number of hours and get £X at the end of the month.

Call me crazy, but I don’t believe that.

If you have a job which leaves you incredibly tight at the end of the month, you can place yourself in a position to make more. Upskill using Shawacademy. They offer online certified diploma courses for £45 per month. This gives you unlimited access to all their courses, and you can learn whenever it suits you. You can use your new found skills to become a more valuable employee- and therefore worthy of a raise. Alternatively, you can use qualifications to get a well-paid job elsewhere.

You can also increase your income by taking on a part-time job, or going it alone using the side income ideas below:

– Online tutoring

– Offering services online

– Freelance Writing

– Selling online

Sell unwanted items

Most houses have hundreds or even thousands of pounds worth of unused items.

You are literally surrounded by money.

Why not list them on eBay, Gumtree or Facebook marketplace? Simply download one of the apps, take pictures and set a price.

Debt management

1) Your savings rate needs to exceed your debt repayment otherwise you will never get ahead.

2) Aim to pay more than the minimum repayment on your credit cards. Most credit cards have interest rates so high that paying the minimum only pays the interest. Lenders love it because this ensures that you are locked in for longer, and end up paying much more. It is like giving them free money.

3) Use credit for essential life emergencies. Luxury shopping and holidays aren’t essentials. An emergency fund will help to cover emergencies such as vehicle repair, illness, redundancy, etc.

Pay more towards higher interest debt because it costs you more over the long term.

It might be worth getting a low-interest loan in order to clear your debts and pay less over the long term. Money Saving Expert’s eligibility calculator is a good tool for comparing loans. 

Final thoughts

There are simple steps we can take to manage our money and grow it over the long term. I hope you found this straightforward guide to personal finance useful. If you did, share this post on social media. If you have any thoughts, feel free to share it in the comments section below or get in touch.

While in higher education, I was awful with my finances. I wasn’t taught about personal finances while in school, neither did young me view it as important. I got my first job at 16 and due to some fortunate circumstances, I was paid like an adult.

I loved nothing more than to bring my bank balance down to zero by the end of the month. Saving money didn’t cross my mind. I was in a charity shop when a £3.24 payment bounced on my card. The embarrassment of all those eyes watching me as if to say “seriously?” gave me a big kick up the back side.

The personal finance industry uses a lot of jargon. It took me so long to work it out. And now, I am simplifying it for you

It can all get very confusing. Therefore, I decided to create a simple plan for taking anyone to a place of robust financial security.

Track your spending

Have you ever checked your balance and wondered “where did all the money go?”. Money is a powerful tool, yet most people choose to go broke trying to look rich.

No matter how much you make, it is vital that you know exactly what you spend your money on. Here are some categories you should track:

Accommodation

Utilities

Entertainment – Netflix, nights out etc.,

Phone bill

Vehicle costs – monthly repayments, fuel, maintenance, insurance & parking

Insurance – home, phone etc.,

Personal hygiene costs

Gym membership

Luxury

      – Designer clothes

      – Restaurants and takeaways

      – Video games

      – Clubbing

Debts

     – Loans

     – Credit cards

Feel free to add to the list above.

Once you know where your money is going, it becomes much easier to make an informed decision on your budget.

You can track your expenses in a spreadsheet, but that takes some time, and it is easy to forget. I recommend using Monzo or Starling Bank to automatically categorise your expenses. I use Monzo to make everyday purchases and attach notes to each one.

For example, some years ago we found that each member of my household was spending at least £40 a month on sim only plans. Therefore, we switched to giffgaff and now pay £10 a month for the same number of minutes. As a result, each person ‘unlocked’ an extra £360+ per year.

Secondly, we also consolidated our entertainment expenses and reduced online shopping expenses by getting an Amazon Prime subscription. As a result, we got rid of Netflix, Spotify and our tv package. If you haven’t signed up to Prime before, take it for a test drive with a 30-day free trial.

This might seem like small steps, but trust me all the savings add up.

Every few months I review my expenses to find areas in which to cut out or consolidate. Any savings are passed into an emergency fund (more on that later). Any savings I ‘unlock’ are then passed on to an investment account with Ratesetter. At the end of the year, I take out the money from Ratesetter and add it to my emergency fund.

By conducting this budgeting technique, I have saved more than £2,000 per year.

Let’s find more ways to keep more money in your pocket.

Income

Most people view income as static. They work for a set number of hours and get £X at the end of the month.

Call me crazy, but I don’t believe that.

If you have a job which leaves you incredibly tight at the end of the month, you can place yourself in a position to make more. Upskill using Shawacademy. They offer online certified diploma courses for £45 per month. This gives you unlimited access to all their courses, and you can learn whenever it suits you. You can use your new found skills to become a more valuable employee- and therefore worthy of a raise. Alternatively, you can use qualifications to get a well-paid job elsewhere.

You can also increase your income by taking on a part-time job, or going it alone using the side income ideas below:

– Online tutoring

– Offering services online

– Freelance Writing

– Selling online

Sell unwanted items

Most houses have hundreds or even thousands of pounds worth of unused items.

You are literally surrounded by money.

Why not list them on eBay, Gumtree or Facebook marketplace? Simply download one of the apps, take pictures and set a price.

Debt management

1) Your savings rate needs to exceed your debt repayment otherwise you will never get ahead.

2) Aim to pay more than the minimum repayment on your credit cards. Most credit cards have interest rates so high that paying the minimum only pays the interest. Lenders love it because this ensures that you are locked in for longer, and end up paying much more. It is like giving them free money.

3) Use credit for essential life emergencies. Luxury shopping and holidays aren’t essentials. An emergency fund will help to cover emergencies such as vehicle repair, illness, redundancy, etc.

Pay more towards higher interest debt because it costs you more over the long term.

It might be worth getting a low-interest loan in order to clear your debts and pay less over the long term. Money Saving Expert’s eligibility calculator is a good tool for comparing loans. 

Final thoughts

There are simple steps we can take to manage our money and grow it over the longterm. I hope you found this straightforward guide to personal finance useful. If you did, share this post on social media. If you have any thoughts, feel free to share it in the comments section below or get in touch.

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