If managing your money seems like spinning plates, you’re not alone. Over 12 million people in the UK do not feel in control of their finances, leading to bad financial decisions and increased stress.
Denial is a big factor. Facing the truth about your financial situation can be uncomfortable and stressful in itself. Our natural inclination is to ignore problems and hope they go away. But studies show that dealing proactively with financial problems makes us feel more in control, ultimately leading to increased feelings of wellbeing.
So what can you do to take charge of your money? Our 10 step plan sets out some simple ways.
1.Work out your Income and Outgoings
The first step is to take a good hard look at your finances. Use an online budget calculator to set out your income and expenditure. Make sure to include everything. If you’re having trouble remembering how much you’ve spent, keep a spending diary for a week. This will help you build an honest picture of your spending.
2.Understand Your Debts
Now you know what you earn and spend, you need to analyse your debts. Again, be honest with yourself and write a list of all your debts.
3.Prioritise Your Debts
Most debts are classed as priority or non-priority, so if you are struggling, pay your priority debts first. These are the debts that would cause you to lose your home or be criminalised if you do not pay.
4.Contact your Creditors
By letting your creditors know you are struggling, they can try and help you. Often it’s possible to come to a re-payment arrangement. Creditors really appreciate you being honest with them – so don’t just ignore them.
5.Pay off your Debts
If you have savings, it’s better to pay your debts than have money sitting in the bank. This way, you will avoid expensive interest charges.
6.Take Out A Loan
It’s never a good idea to get into more debt, but if you owe money to a creditor who charges high interest rates, it might be better to borrow at a cheaper rate, to pay off your debt. However, you will need a good credit record to benefit from competitive interest rates.
7.Increase your Income
It’s not always easy, but finding some way of making more money will go a long way to tackling your financial problems. Taking in a lodger, or offering a useful service can all be done in addition to a regular job.
Price comparison sites are great for comparing the cost of utilities. The chances are you’re paying more than you should for services such as gas and electricity and broadband. Shop around to find a better deal.
9.Seek Debt Advice
Taking professional debt advice can help you tackle your debts. Always seek help rather than ignoring the situation.
Make sure you are not missing out on any benefits you might be entitled to. There are many useful online benefits checkers, or contact your local job centre for advice.