Ten Good Habits for Improving Your Finances
Most of us have to learn how to handle our finances over time. If you follow the ten steps below, you will develop good money management habits and increase your financial well-being.
1. Get OrganisedThe first good habit to learn is to be organised. The sooner you get a clear understanding of your financial situation, the quicker you’ll be able to improve your finances.
Start with a pen and paper and put down all your monthly income. Next, work out your monthly expenses, such as mortgage repayments, credit card bills, personal loans, council tax and utility bills.
Once you have an idea of how much money you have to pay out each month, you can think about where you might be able to reduce your expenses, or perhaps think about increasing your income.
2. Don’t be in Denial About Money ProblemsMake sure you open your bills when you get them, so that you know exactly what money you owe to whom, and when. Money troubles can be very upsetting, but nobody is going to sort them out other than you. The worse thing you can do is ignore your financial situation, stop opening your bills and act like nothing is wrong.
There are plenty of sources of free advice, such as the National Debtline or the Citizens Advice Bureau, who will be able to help you work out your financial position and what you need to do to improve it.
3. Check your Bank Balances RegularlyKeep track of the state of your current account on a regular basis, either on line or at a cash machine, and you’ll avoid getting overdrawn by mistake and paying costly bank charges. More importantly, by checking your account regularly you’ll spot any errors or fraud on your account as early as possible.
4. Start Living Within Your MeansOnce you have drawn up a monthly list of your income and expenses, make sure that you start living within your means. Borrowing money to pay for monthly outgoings, such as food and shopping bills should be avoided at all costs.
5. Use Direct DebitsSet up direct debits for your regular bills, including your credit cards. That way you won’t miss any payments and you can make additional payments with any spare money each month.
6. Get a ShredderKeep all your financial documents in one place (a file box is usually best) and shred any old documents instead of throwing them out with the rubbish. You’ll be amazed how therapeutic it feels to pay off your debts and to shred all of the accompanying statements that went with the debt!
7. Be Friendly With Your LendersAlways be polite and courteous with companies that you owe money to. If you are finding it difficult to keep up with scheduled payments, talk to the lender as soon as you can, explaining your situation and asking for their advice. They may be able to help you.
8. Start SavingThe best habit you’ll ever learn is to switch from being a borrower to a saver. Start by setting aside a regular amount each month – create an automatic payment to come out from your account soon after your salary gets paid.
Over time, your regular savings should start to grow. You should aim to create an ‘emergency pot’ of between one and two months’ salary.