10 tips to master your personal finances starting today.
As we approach spring, it is a good time to start planning your personal finances for the year ahead. Perhaps getting in control of your personal finances was one of your New Year resolutions as you have looked at your post-Christmas bank balance? It’s so easy to spend more than you budgeted for over the festive season.
Everyone is feeling the pinch and it may seem that getting on top of your personal finances is out of your control. However, even though there is a cost of living crisis, it doesn’t mean a plan isn’t appropriate – in fact a plan is even more important! Knowing and understanding your finances and getting as much control over them as possible is crucial. By having definite plans in place, you are more likely to stick to them rather than just hoping and praying that your finances will be better later this year. By planning now, you will have more focus throughout the year so it’s worth spending the time on sorting it out.
What do you want to achieve with your personal finances?
This is a crucial starting point to getting in control of your personal finances and you need to take time to think about this before you set any plans. It will help with your motivation in sticking to your decisions over the next 12 months.
Think about the short and long term. Obviously, your age will impact on any decisions you make and also whether you are in a relationship or have a family. Make a list of your priorities. What do you want to achieve with your personal finances? Do you want to save for something big like a deposit on a house? Is your priority about going on holiday next year? Do you want to start a pension? Are you wanting to get out of debt?
What is your current financial situation?
Now you have decided on what you want to achieve with your personal finances, before you go any further and start to take control, you need to know where you are now.
Think about your current finances:
- Do you have healthy finances?
- Are there any gaps in your financial planning? Do you have things like ‘update my will’ on your list or ‘set up an ISA’? If so, how about working towards getting these done?
- Do you know what you want?
What do you want your financial situation to be?
You need to know what you are aiming for in your personal finances. This is where you go back to what you said you wanted to achieve with your personal finances, such as a holiday or starting a pension, and start thinking about what that looks like for you in the next 12 months.
- How much would you like to be saving each month? Even saving a small amount will improve your mindset. But remember, if you have any debts, deal with them first.
- What goals do you want to achieve? Be as specific as you can when describing these goals. If you can feel what it would be like to achieve them, you’re more likely to move towards them.
- When would you like to retire or start to work less? A big one but worth thinking about now even it’s a way off!
What do you need to do to get to this position?
Once you know what you are aiming for, now it is time to ask yourself some questions on how you will get there.
- Budgeting – It is always a good time to be budgeting, and even more so this year – sooner rather than later
- Pension – Is starting to make pension contributions on your list? Could you set up a meeting with a Financial Planner?
- Will – Does your will need to be updated? Have there been any changes to your circumstances? Should you consider setting up a power of attorney?
- Debt – Do you need to sort out your debt? If you do then be honest with yourself and get a plan of action in place.
- Saving – Are you saving regularly into your ISA? You will feel better if you build up an emergency fund.
10 Tips to take control of your personal finances now
Finally, list the steps you will take to plan your personal finances for 2024. It will help if you put dates next to each action, then you are more likely to stick to it.
- Organise your financial records by gathering everything together so it’s easy to find what you are looking for.
- Back to my first point in the article – what do you want to achieve with your personal finances? Set goals to give you clarity and focus.
- Start to change your spending habits so you cut your costs and save more. Start small by making small changes such as cooking more at home and not buying take away coffees or cancelling a subscription you no longer use.
- Set up a budget and keep it up to date. This is a great way to plan how you’re going to spend and save money. If you like using apps then there are lots of budgeting apps out there. Have a look online and see what will suit you the best
- Start saving once you’ve cleared any debt. Have a current account and a savings account as you’re less likely to spend the money you have worked hard to save. Also, it’s motivating to see your savings grow. Transfer your savings at the beginning of the month. Even if you can only save a small amount each month, you are starting to take control and it will make you feel better.
- Don’t forget your tax fee savings accounts. Remember you have £20k you can invest before the end of the 23/24 tax year.
- Start comparing the prices of your utilities, phone, mortgage, etc. and see if you can make any savings. I did this a few years ago with my phone and car insurance and was surprised with the savings I made.
- Remember you’re not on your own – it’s ok to ask for help. It may be that you are a business owner who struggles with managing your personal funds. Could you ask your accountant for guidance?
- If you already have a work pension, could you increase your contributions? Even a small amount will help. This will save you more tax each month and help to grow your pension.
- Set up a personal account with HMRC so that you can find out your retirement age and also how many years of national insurance contributions you have made and whether there are any gaps.
Make 2024 the year that you take control of your finances and start planning for the future. Remember, there are plenty of people out there who can help you, but the first step needs to be made by you. Get in touch if you’d like to talk about your personal finances. Good luck!
Anna Goodwin @2024 All Rights Reserved.