But maybe you’re not sure where to start, or you never quite have the time. Sound familiar? The thing with finance is that getting things sorted sooner rather than later can make a huge difference to your long-term wealth. So, it’s time to take action – today! Independent Financial Adviser Julie Hunt, whose book The Money Compass is out now, has these top ten simple steps that will lay the groundwork to improve your relationship with money and help you achieve your financial goals.
The first step to becoming financially savvy is to really believe it’s within your power. The chances are that if you’re thinking you’ll never be able to afford that new car, then you won’t! Be positive. Look forward to forming some new habits which will enable you to take control of your finances. Flip “I’ll never be able to go on that holiday” to “I will finally be able to save for that holiday”.
Now everything is done digitally, it’s easier than ever to keep track of your spending. But it’s also easier than ever to ignore it! Make a habit of checking bank transactions regularly. Look out for direct debits that appear monthly – do you really need whatever it is you are paying for? If not, cancel it!
Sit down and think about your financial goals. You may want to split them into short-term goals (like a holiday) and long-term goals (like buying a new home). Estimate how much each goal will cost and when you want to achieve it by. You can then work back and calculate how much you need to save each month to achieve your goals.
This could be a good time to work on a budget. How are you going to find that extra money you want to set aside? Where can you save each month? Can you get a better deal on your electricity, or mortgage payments?
That old saying “out of sight, out of mind” is so true! Set up standing orders from your current account to your savings accounts. You may be surprised, when the money isn’t there to spend, how little you miss it. These savings will soon add up!
It’s quick, easy and free to check your credit score online – a healthy credit score is an important part of the finance puzzle.
Knowing the difference between good and bad debts will help you improve your credit rating. Good debts include things like mortgages, or student finance. They’re not always a bad thing, especially when interest rates are low. Rather than making overpayments on these kinds of debts, it can be better to invest that money instead.
Bad debts are things like credit cards and store cards. But even these can help contribute to your credit score if you manage them carefully. Never spend more than you can confidently pay back and make sure you pay off the balance each month wherever possible.
Whilst there are lots of ways to save for later life, there are few options more reliable than a good old pension, so ignore them at your peril! The earlier you start to save, the better – the longer you have to benefit from the magic of compound interest! So even if it’s a very small contribution each month, it’s a good habit to stick with.
Have at least three months’ worth of your income tucked away in a bank account for a rainy day. Why? So you can access it at short notice for those unexpected bills – for example if you need to replace your boiler. It’s one of the best ways to give yourself a bit of peace of mind around your finances.
The steps you can take to mitigate your tax liability will depend on your individual circumstances. But one of the simplest ways is to make sure you use your tax-free ISA allowance each year.
If the past 18 months have taught us anything, it’s that the unexpected can, and does, happen. Having the right financial protection in place – life insurance, income protection insurance or critical illness cover – can be a vital step in helping you through tough times.
Reviewing your finances should not be a one-off activity. Your own circumstances will change, as will your priorities, so schedule an annual review with yourself to see how you’re doing and whether you need to make any changes to your plans.
If you follow these tips, you’ll be standing yourself in good stead for a more positive financial future. However, if there’s anything you’re not sure of, or if you have a lot of money to manage, seek advice from a professional financial adviser. Multiple studies have proven that taking financial advice can add significant sums to people’s wealth over their lifetime, so if you’re serious about making the most of your money, it’s well worth considering.
Julie Hunt is a successful IFA and female business owner. Having been at the helm of Face to Face Finance for 18 years, Julie has recently launched The Money Compass, a podcast and online community aimed at helping female business owners take control of their finances.
Julie’s first book, The Money Compass: An insider’s guide to financial success, is available on Amazon and in all good bookstores now.
You know you should be paying your finances more attention. But you’re not sure where to start, and you never quite have the time to find out. Sound familiar?
The Money Compass is an easy-to-follow guide which takes you through all the steps you need to build a clear picture of your finances now, and to create a plan to achieve the financial future you desire.
Each bite-sized chapter helps build your knowledge and understanding of finance, answers the questions you’ve been too embarrassed to ask and helps empower you to make financial decisions with confidence.
From gaining focus, setting your goals and budgeting, to investing, and funding the retirement of your choice, following the steps laid out in this book will leave you feeling organised, in control and with the peace of mind that comes from knowing you’re on the right path.