In a world that is becoming increasingly financially unsteady, sometimes it can feel like maintaining stable finances is becoming more difficult with each passing day.
There are, however, some actions you can take to make sure your feet remain firmly on the ground – so keep reading for our top seven financial tips and insights.
-
Get to know your spending habits
Before implementing any new ideas to improve your financial stability, it is important first to get to know your spending habits.
Take a closer, more realistic look at the ways you spend your money, and try to identify your most common spending patterns and behaviours. Once you’ve recognized any unhealthy spending patterns, you can then take steps to improve them.
The best thing to do is take a look at your previous bank statements to assess how, where, and when you are spending your money. Does your spending increase the days immediately after payday? Are you paying for subscription services you don’t use anymore?
After doing this, you can start to understand where your money is really going, and can hopefully begin to make better choices and ultimately improve your finances.
-
Earn more than you spend
This may seem like an obvious point, but it’s a super important one. With easy access to credit cards and other quick cash loans, it can be easy to get into the habit of living beyond our means – and very hard to get out of it. Combined with the high-interest payments on borrowed finance, it’s easy to end up way out of your depth.
Whether you enjoy spending your cash at restaurants, fashion stores, or real money casinos, the answer is simple: at the end of the month, make sure the money you have earned outweighs the money that you have spent. It’s one of the simplest, most important ways to maintain stable personal finances.
-
Create a budget
Now that you understand your own spending, creating a strong budget is essential for transforming those negative habits you have identified into more sustainable ones.
A budget is basically a simple financial plan to help keep on top of your monthly outgoings and should encompass all your essential expenses – from your monthly rent and bills to the money you spend on Friday night takeout.
Creating a budget ensures that all necessary monthly expenses are covered, and can help prevent you from overspending on non-essential items. Setting up a careful budget can even allow you to set aside a portion of your income as savings, which can come in handy on a rainy day.
Importantly, you should be realistic with your budget – don’t restrict yourself too much, as this decreases your chances of sticking to the plan.
-
Reduce debt
Having high levels of debt can have a highly detrimental impact on your financial stability. The money spent to cover interest on debt payments could be much better spent elsewhere in your monthly budget – and the effect that high debt can have on your mental health can further exacerbate negative spending habits.
It is therefore crucial that you get any debt under control, and begin steps to reduce it. There are multiple methods you can use to reduce debt, such as the snowball or avalanche methods. Do some research, and see which methods might be helpful for you.
-
Save for a rainy day
Even after following the above steps, you can’t plan for everything. Whether it’s a broken tumble dryer or a stolen car – there will always be things that happen in life that you can’t predict, especially when it comes to finances.
It is therefore incredibly vital to direct some of your income into a rainy-day fund to help cover these unexpected events. It might seem like a waste of time right now, but when the time comes, you’ll seriously thank yourself for being prepared.
-
Maximise your credit score
One of these days, that rainy-day fund just won’t cover it – whether it’s an extreme financial emergency or a significant financial commitment like buying a house. When the time comes, it’s hugely important to make sure you have a good credit record.
Maintaining a high credit score will enable you to qualify more easily for bank loans and other forms of credit, giving you the ability to make large purchases more easily.
Importantly, the higher your credit score, the lower the interest rates will be on your loans – which could save you significant sums in the long run, whilst also making your debt far more manageable.
-
Invest your money (wisely)
Careful investment of a portion of your income can be a great way to ensure the long-term stability of your finances.
Investing allows your money to grow over time, whether that’s through interest gained, or dividends on the investment. This additional income is always welcome and can help to supplement your main earnings.
Investing can be particularly useful for retirement planning, as investments help to provide extra security when you are no longer working, giving you the financial freedom to retire comfortably.
However, it is extremely important to understand that not all investments guarantee positive returns. It is crucial to conduct thorough research, seek professional advice, and ensure you are in the financial position to invest before doing so.
Ultimately, maintaining stable finances always comes down to making sure you live within your means. Once you start to feel more in control of your financial situation, you can start taking new actions to further grow and improve your finances.
Go on – why not try out a few of these tips today? It won’t be long before you start to see the benefits of prioritising your financial growth.
