Sometimes it can feel like everyone else has their finances in order, and you are suffering with cashflow shortfall and poor savings all on your own. But the truth is, most people have money troubles from time to time, and while there are people who are very financially savvy, most of us are just trying little financial hacks here and there and practicing good money management habits when we can.
If you feel like your finances could do with a facelift, but you’re not sure where to start, consider giving some of the money tips below a go. They might not revolutionise your bank balance overnight, but after a few weeks, you should start to see a big difference.
Where to Start
Before starting on your journey to better money management, there are a few stepping stones you need to cross first. The biggest and potentially most important one is ensuring you have an accurate budget in place. This will help you keep your finances on track and show you where you can afford to make savings, invest and generally take better control of your money.
Consider Investing
Investing your hard earned cash is a scary prospect because it could be a gamble: there is no hard guarantee that you will receive a return on the funds you put in. This is why it’s important that you pick a suitable risk level and that you don’t invest more money than you can afford to lose. While no-one starts an investment portfolio with the intention of losing money, it is a possibility you should be prepared for. Research how you want to invest your cash before you buy any stocks or financial assets. While it might not prevent a loss, you will be better equipped to make a sensible judgement.
Investment doesn’t just involve trading. You can invest in property, cars and even niche collectables. For non-stock investment, you will need a good knowledge of the assets and a passion for it otherwise you could make some big mistakes. If you want to get into trading, you can often find apps and websites that offer a trading trial so you can practice before you start using your own real money.
Remember that this kind of investing is usually a long-winded process. Quick wins are fun, but usually only achievable with large investment sums that come with a high risk. Investing a small amount now and managing it carefully could see you with a good return by the time you need the money in a few years or even decades’ time.
Choose a Good Savings Option
If you are worried about the risks of investing, there are some safer ways to manage your money that might earn you higher returns than a standard savings account, without the risk of losing your money altogether.
- Consider putting your savings in premium bonds: you need just £25 to start and you could win between £25 and £1,000,000 each month. There is no guaranteed interest rate, but the funds are always accessible.
- You could open a lifetime ISA or even just a cash ISA. A lifetime ISA has set criteria and you can only use the funds for your first house purchase or retirement, but with a potential bonus of £1000 a year, it’s one of the easiest ways to improve your savings. Cash ISAs are an alternative option if you want to be able to use the funds for various purposes, but make sure you compare the market as difference banks and building societies offer different interest rates.
Taking Out Credit
Getting loans online is usually straightforward, making them an accessible option when you need a quick fix for your finances. But borrowing money isn’t always the right solution, especially if you’re already feeling a slight strain with your existing financial responsibilities. While using credit may solve your cashflow issue in the short term, you will have to repay the funds over the next few months which can make things trickier further down the line. Before you take a loan or even start looking at where to borrow money, go back to your budget and re-evaluate your finances. You may be able find the cash you need by adjusting your expenses for a few months, or maybe you’ve saved enough from the other financial hacks you’ve been trying. In any case, while credit can help you resolve short term cashflow shortfall, it should never be your first port of call, even though the repayments may be affordable.
Look After Your Financial Wellbeing
Your financial wellbeing and your mental health are typically intrinsically linked. If you don’t have a healthy relationship with money, it may affect your mental health. This is why it’s critical you look after yourself as well as your finances. While it can be easier said than done, there are a few ways you can improve your financial wellbeing on a daily or weekly basis:
Talk to your friends and family
It can be difficult to open up about sensitive issues but often talking about a problem can help alleviate its stresses. You don’t have to go into too much detail or disclose any information to people you don’t trust but leaning on a close friend or family member from time to time might be all the assistance you need.
Talk to a free debt advice service
There is still some stigma around getting help if you’re in debt or if you’re just worried about your finances but there really is no shame in reaching out when you need advice or guidance. There are free charities online and over the phone who can discuss your financial situation with you in order to sort out a new budget, a debt repayment plan or even just reassure you that you’re doing okay.
Take time for yourself
Sometimes, all your mental health needs is a break from the stresses of routine daily life. Every now and then, take an evening or an afternoon or even a couple of days to focus on your mental and physical health. It might just be a candle-lit bath, or it could be a weekend away from your normal surroundings. Caring for yourself will benefit your general quality of life and in turn your finances too.
Some financial hacks can be complicated, but often we can see a benefit when we focus on the simple changes instead. When it comes to money, making small adjustments regularly can be a far more effective way of improving your circumstances, because you won’t have to suffer any huge sacrifices. It still takes time and effort, and you may find you can’t always maintain the changes but practicing little financial hacks as often as possible can change your money management for better.