Financial fears are a common worry. Research by Money Guru has found that nearly 20% of people in the UK are more scared of checking their bank balance than they are of more traditional fears like heights or spiders.
How can we pay off our debts? Is our credit score too low? Will we ever save up enough to retire?
But it isn’t all doom and gloom. During the scary season, why not think about how you can manage your finances to reduce the fear factor.
Credit card debt – turn those fears into opportunities
Credit card debt is one of the most common financial fears among working adults. Although it may seem daunting, staying organised and knowing your limits can help you keep on top of your finances.
If you have multiple credit cards prioritise paying off the one with the highest interest rate first, to minimise the interest you pay and reduce potential future debt. Most credit card providers also have a mobile app – allowing you to frequently check your balance and monitor your spending.
If you have larger debts on credit cards you might also want to explore consolidating and doing a balance transfer to a card charging less interest. Some charge 0% interest on balance transfers for a certain period, although there may be a small fee involved.
It’s easy to worry about using a credit card, as, if not properly managed, debts can spiral. But used properly, they can offer real advantages. Some offer cashback just for using them, so putting regular expenses on your card – which of course you pay off in full each month – means that not only will you avoid paying interest, but you’ll also be building a good credit score and actually earning money.
Some providers offer other benefits when you spend, such as travel rewards, hotel packages and more. This means you can reap rewards and save money on leisure activities.
Check sites like Money Supermarket or Compare the Market, to see what kind of credit card is most suitable for you. Comparison tools are a great method for assessing which providers have lower interest rates, but also to match how you intend to use your card – whether it’s for small regular expenses or a big purchase.
Pensions – how to stay on track for retirement
When you’re caught up in daily working life, retirement may seem far away. However, time really does fly and the sooner you start saving the more time you have to build up your pension pot. A global retirement readiness survey by Aegon found that women are less prepared for retirement than men. Not having enough saved up for retirement is also a shared financial worry among working adults.
Think about what you want to do in later life and how much you need to fund these plans. Most people are automatically enrolled into a pension scheme, with contributions from their employer. That’s a valuable benefit, but you may want to contribute more over time to meet your aspirations.
Once you know what you’re aiming for, you can put an action plan in place – whether that’s revising your budget so you can contribute more to your pension from the get-go or increasing your contributions gradually over time. Regardless of how small your contributions are at the start, it’s important to start saving for retirement as soon as you can and make the most of the employee benefit available.
It’s likely that you’ll end up with a few pension pots over time, as you move jobs. Keep a record of those pots and, at some point, it may make sense to bring them together. Consolidating can help you to reduce charges that you may be paying to different pension providers, and it may help you manage your money more easily when you start drawing an income.
Financial education – where to start?
Regardless of where you are in your career or your current financial situation, it’s never too late to learn how to tackle your finances.
There are plenty of online resources which can help you keep track of budgets and ensure that you don’t overspend. Sites like Money Advice Service offer free advice on common financial fears, such as pensions, debt, insurance and more. They also offer a budget planner tool, providing a starting point to help you get organised.
Have a think about your long-term financial goals and how to obtain them. Maybe you have plans to invest in the future or take out a mortgage? For big financial decisions, it may be worth contacting a financial adviser. Financial advisers can tailor a financial plan specific to your circumstances and recommend tools to help you achieve your financial goals. In the process of finding the right one for you, make sure to visit the FCA website to check their credentials.
Don’t get spooked
The longer you put off tackling your finances, the scarier it’ll seem when you eventually get to it. Take one thing at a time, and you’ll soon find it more manageable. And don’t forget there are free tools to help you along the way!
About the author
Catherine Winter is Head of Financial Capability at The London Institute of Banking & Finance, which provides financial qualifications for all ages.