Why wait for the New Year to resolve to get in shape? You can become financially fitter by decluttering your finances and organising your money.
You probably won’t become a millionaire by getting your finances in order. However, getting financially organised can lead to arguably more valuable riches; less stress in your life. Money management and planning for the long term financial future is important. Speaking to a specialist and taking on expert advice is helpful. Check out Portafina.
Start organising your money today. Here are four tips to get you going.
1. Create Compartmentalised Bank Accounts
In the same way as you keep different types of clothes in separate drawers, you should compartmentalise your money.
For instance, have separate accounts for food, utilities, travel, your social life, savings, and other spending. Indeed, it seems obvious to keep your savings in a separate account from your social spending. If you don’t, you’ll likely blow your savings on something trivial.
Also, consider where you keep your different money categories. For instance, you’ll need instant access to your money for everyday expenses, so a current account is suitable.
On the other hand, your savings should go somewhere that provides some growth, such as an ISA. However, you might have to give some notice to access these funds.
Setting up separate accounts is straightforward with a mobile banking app. With a couple of taps, you can quickly move funds between accounts. These apps also make keeping track of your money easy.
2. Review Your Regular Payments
Mobile banking apps also make reviewing your direct debits and other regular spending easy. If you haven’t done this recently, you might be surprised at where your money goes each month.
The price of subscriptions such as TV, broadband, mobile phones, and digital services are prone to rise sharply once an introductory period has expired. You can easily miss these rises, making it more crucial to check your direct debits regularly.
While checking them, consider shopping around for better deals. You could make considerable savings by switching suppliers, and you can find great deals on price comparison sites.
Once you’ve settled on your preferred suppliers, set up the payments to leave your account as soon as you get paid. Doing so will ensure they get paid and give you clarity of your finances for the rest of the month.
3. Get Rid of Your Debts
The best thing you can do to get your finances in order is to get rid of your debts. Becoming debt-free is a beautiful feeling and will give you a much less stressful life.
The good news is you can achieve this by making a few lifestyle sacrifices and spending cutbacks. Of course, you will have to miss out on certain things in the short term.
However, you should not focus on what you’re giving up. Instead, keep your mind on the long-term benefits of becoming debt-free. Doing so will help you concentrate on your goal.
To get started, list all of your debts in order of their interest rates, with the highest first. You should pay off your debts one-by-one in this order. Clearing your high-interest debts first will leave you more disposable money to deal with the lower-interest obligations quicker.
4. Look After the Future You
Organising your finances is excellent for the present as you’ll have a more enjoyable, lower-stress life. However, you should also consider yourself in the future and start planning for retirement. Although you may still have twenty or thirty years left to work, there is no time like now to start looking after your future. Of course, you might not know where to start.
Where to Start
You may or may not be aware of it, but you could well have already started your retirement preparations. If you are employed and meet the qualifying criteria (over 22 and a salary of £10k+), you should be enrolled in a workplace pension. Workplace pensions are excellent, and you’ll benefit from contributions from your employer on top of your pension payments.
You will also have the State Pension when you reach the qualifying age; currently 66. Although this benefit is an excellent supplement to your retirement income, it’s unlikely to be sufficient to support you on its own. Therefore, you should ensure you have other financial plans for a comfortable retirement.
Hopefully, this article will help you get your money in order to prepare for the future and make the present more enjoyable.
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