While people work hard to earn pound after pound and collate the same for important purchases for themselves or their family, sometimes, managing the funds in their accounts is not the easiest thing to do. Despite having the intention to earmark for future use, people end up spending on impulsive purchases. What could have been used for paying off debts or invested towards pension, ends up being spent on chocolates and extra groceries. It is for this reason, that we’ve decided to jot down points of information which can help you manage your money the best possible way –
- A Prospective Budget – A budget is the easiest way to compare prospective spending with actual spending. Any deviations can intimate you regarding possible increase or decrease of spending in the consecutive weeks. In the UK, more than half of the households enjoy keeping a budget as it gives them a reliable estimate of costs and income as well as a peace of mind. It helps to keep a ceiling for each expense head.
- Reallocation of ‘recurring’ expenses – Recurring expenses such a gym membership or the subscription to a service, can be stopped and reallocated to more immediate requirements like rent or groceries.
- Reallocation of mortgages and loans – While it is easy to reallocate funds to more immediate needs, one can also transfer loans from one bank to another which will reduce the interest obligation in cases. This is important because a major chunk of one’s salary is linked to loan and mortgage obligations. In the UK, organizations also provide a swap in terms of a secured loan from an unsecured loan and therefore if you are willing to part away with more as interest you can subscribe to the latter option.
- Minimize credit card expenses – Credit card expenses tend to give your short-term gain for medium term pain. This is because interest on credit cards are extremely high and volatile, and therefore credit cards are expensive. It is therefore extremely important to reduce credit card expenses. Instead save money and use a debit card more often.
- Setting a savings goal – Expenses should always be pre-financed. Hence if there is a shortage of funds linked to a future expense, it is important to create a savings goal which will ultimately enable one to compensate for the amount remitted to future expenses. In case the savings goal is not met, it will still reduce the liabilities which might be accrued by the savings till then.
- Finally, Invest the Savings – It is good to save in a savings deposit account; however, it is even better to invest that amount in the stock market, mutual funds or long-term deposits which will earn one greater interest/returns on the money invested and therefore it is important to invest ones savings. Perhaps the most important job is to ensure that the investments stay invested for a long period of time and not just redeem it during a short-term requirement.
Managing money can be a tedious, yet easy task and therefore there are many options to adhere to. It is important to understand that these options must be resorted to effective and efficiently. Many financing lines of businesses are there to support these needs and can be used smartly.