Many of us are struggling to repay debts and look after our families at the moment, let alone save for the future. But there are steps you can take to stay on top of your money situation and get your finances back on track. It needn’t be scary, as long as you take it one step at a time…
1. Face facts and start budgeting
Keeping track of what’s coming in and going out is the first step towards taking control of your finances – even if it makes depressing reading!
2. Downsize your debts
Review the interest rates you’re paying on your cards and loans and see if you can get a better deal, such as a 0% interest offer on a new credit card.
Try to work out a repayment plan to pay off the debt before the 0% interest period ends. If you can’t, pay off those with the highest interest rates first.
3. Shop smart for the best deals
Become a smarter shopper and cut the amount you’re spending on groceries, family essentials, gifts, travel and clothing.
4. Switch providers
Bundle your financial services and utilities together or change providers completely. You can save serious money, especially if you’ve been with the same company for a long time.
5. Consider remortgaging
Many homeowners remain on their lenders’ standard variable rate (SVR) when their mortgage deal comes to an end. But remortgage rates have come down – and that could make a big difference to those monthly outgoings. Always remember to factor in any arrangement fees.
6. Boost your earnings
Are there steps you can take to increase your income?
Make sure you’re receiving all the state benefits you’re entitled to, and aren’t paying too much tax. You can use the government’s benefit adviser tool to help you.
Consider asking for a pay rise, selling your unwanted items and taking on extra work that you can fit around your family.
7. Redo your budget and get help if you need it
Once you’ve followed steps one to five, take another look at your finances.
If your revised budget still leaves you unable to make debt repayments, then now’s the time to speak to an advisor. You can call the free, confidential and independent National Debt Helpline on 0808 808 4000.
8. Start a savings plan
If you can, start setting aside regular sums of money into an ISA savings account (even if it’s just £10). This will be far more successful than saving whatever may be left over at the end of the month.
You can avoid paying income tax on any interest you’re earning by using your ISA allowance. This allows you to save up to £5,340 in cash per year, tax free.
9. Start a pension
Retirement may seem a long way off, but the earlier you start a pension, the better. If you have access to a company scheme you should consider joining it, as your employer might make contributions on your behalf. Check out the Beginner’s Guide To Pensions at Direct.gov.uk.
10. Don’t stop saving!
Once your finances are on course, don’t think you can rest on your laurels! Keep track of what you’re spending every week and set dates in your diary to give yourself a six-month financial health check.