25th August 2015 at 4:00pm
There are lots of tips and advice out there on how to make the most of your money, from taking easy, practical steps to tackling every aspect of your finances. The trick is finding what works for you.
Start by being honest about your finances
Do you want to tweak a few things or go the whole hog and sort pretty much everything? Whatever you want to accomplish – avoid debt, save for something special or put money away – the ideal starting point is being able to see the full picture: look at your spending, savings (if you have them) and debts.
Be honest with yourself – avoiding things can seem easy but isn’t helpful when it comes to money. Look at all your spending – it might surprise you where all your money goes, even that sale ‘bargain’ you didn’t get round to wearing.
Once you really know what you’re dealing with, you can take steps to give yourself a money makeover.
Money Makeover – Start with the basics
Julie Hutchison, Consumer Finance Expert at Standard Life, takes a practical and simple approach to getting your money into good shape. “As a first step, start with managing your everyday money and bank account to get out of the red if you have debts,” is her recommendation.
Set a realistic budget and cut back on spending where you don’t need to – just think, cutting that £3 coffee every weekday could see your spending slashed by up to £750 a year. That’s a useful sum towards a great holiday, paying off a credit card or putting towards a child’s savings. And it could give you financial cushion and breathing space should something unexpected happen.
“This is your cash fund to cover roof repairs, the new boiler, paying your rent or mortgage if you lose your job – that kind of thing,” adds Julie. “How much you need here varies but having cash savings to cover several months’ costs puts you in a good position.”
You can read more on this at Julie’s MoneyPlus blog.
When it comes to your spending, ask yourself, do you need it and, if you do, could you buy it cheaper?
Make your money go further by using vouchers, online promotions and offers. If you find it hard to rein in what you spend, it’s worth having a think about why that could be. Is it a case of spending to make yourself or others happier? Our emotions about money can be complicated, with our attitudes to money formed when we’re children. It can be hard to break the habits of a lifetime.
Using cashback websites is a great way to get money back on what you spend with some banks even offering cashback when you pay bills by direct debit as well as purchases.
Money saving expertise
Martin Lewis, founder of the money-saving website moneysavingexpert.com has this advice.
In a nutshell, spend less than you earn, really understand where all your money is going (which many of us aren’t) and keep yourself out of debt.
Spending time on your finances is one of Martin’s top recommendations – he even suggests dedicating ten hours, one weekend a year to give yourself a thorough annual money makeover as a sure-fire way to getting your finances sorted.