How to Manage Money

Want to feel less stressed about your current and future financial goals? Here are few ways to manage your money confidently and effectively.

1. Understand your current financial situation. To evaluate your financial health and progress you need to calculate your net worth, which is the difference between what you own and what you owe. You can then look at your debt, if there is any, and create an actionable plan on how to get out of it. The faster you pay it off, the less you’ll pay in interest.
   
2. Set your priorities and ‘non-negotiables’. Having realistic financial goals will not only allow you to stay focused on your priorities, but also avoid overspending. Before creating your budget, work out what’s most important to you and think about expenses to cut back. Remember, even minor cuts can make a big difference to your finances.
3. Create a budget. Wondering how to use your money wisely? Creating a realistic budget and sticking to it is the most important step of money management, as it’ll help you understand where your money goes. Find out more on how you can create a budget that works for your individual needs, spending habits and lifestyle.
4. Pay your bills on time, if you can, to take control of your finances and reduce stress. This will allow you avoid late fees and debt, while boosting your credit score and benefiting from low interest rates. Remember that your credit score can impact various aspects of your life, like renting an apartment or getting a mortgage. Set up direct debits to never miss a payment, or explore more payments methods to find the one that suits you.
5. Try to save a set amount each month. To make sure you’re not tempted to use this amount, don’t wait till the end of the month; treat saving as a bill that needs to be paid and set up a standing order to a savings account to automate the process.
6. Establish an emergency fund to cover unexpected expenses, such as medical expenses, home repairs or living expenses in case of unemployment. Start small by setting your saving goals, then make regular contributions and track your progress.

Set up a budget to stay on top of your finances, avoid unnecessary costs and save money for your future needs.

1. Understand your monthly expenses. Check your bank and credit card statements to review all transactions you’ve made over the past three months. Use a spreadsheet or a budgeting tool to work out your income, such as earnings, rent from property, and pension income, and outgoings, like regular bills, subscriptions, and food. If you find you’re spending more than you have coming in, then…
2. Think where you can make cutbacks. Review your spending habits and check your bank balance to understand where your money is going. Cancel unnecessary commitments, such as subscriptions or services you no longer use, and check your electricity, gas and insurance bills to make sure you’re on the best deal. Also consider shopping around for products and services, and look for discounts and coupons when shopping.
3. Set a budget for each different category. To do so, cover your biggest expenses, focusing on housing, food and transport. Consider opening separate accounts for bills, transport, holidays and your emergency fund to prevent yourself from spending that money on other things.

Struggling to cover your bills? Get support from charities like Citizen’s Advice, StepChange and National Debtline, which offer free debt repayment advice.