How to manage your finances

Managing your finances can be a tricky situation. It’s something we have to learn on our own. Finance management is not taught in schools (though I think it should) and it is a really important factor in our lives. We all have to deal with our finances at some point in our lives and more often than not, we are not prepared for it.  It’s such an important matter; knowing how to manage your finances is vital in relation to your financial security and healthy credit score.

The topic needs to be taken seriously because the way you manage your finances can have a profound impact on your life. Managing your finances can be like watching paint dry – all it will feel like is nothing but paperwork and numbers. The main goal is to compare your finances by looking at what you have earned compared to what you have spent and this can prove to be tricky. Consequently, when looking at your finances, you need to take in the consideration of psychology, personal habits and the values you chose to live by. Never feel alone or isolated when it comes to your finances. There are companies out there that want to help. If you ever feel like you’re in a black hole regarding your debts, maybe consider a winding up petition.  If you have gone through the CVA process and still have outstanding debts, a winding up petition can prove to be your only option when paying back those debts as the business assets are liquated to pay off any remanding fees.

Ways to keep your finances up

  • The simple theory is to basically spend less than you’re earning.  It might sound ‘normal’ but it’s very important for your future and your savings, and people don’t seem to understand this. Life tends to throw at you unexpected surprises and you need to make sure you can afford all of them. This is why spending less than you earn allows you the freedom to save and prepare for the future as well as deal with the inevitable crises that life throws at you- the bigger the gap between your incomes/spending the better.
  • Now this leads onto the next point: always plan for the future. Having money put aside will help through difficult financial situations throughout your life. Consider opening a savings account. With the money you saved up and put aside you will avoid debt and be able to pay for anything out of the ordinary.  So, the build-up of these funds will therefore help with those unexpected car repairs, childcare costs and any added educational costs. At the end of the day, you never know what is awaiting you in the future, so having money saved up will allow you to be prepared for the worst.
  • Understand what you can spend. Knowing how to plan and budget will give you a better understanding of how much you can spend and benefit your savings. Schedule everything out. You can give yourself a set amount of money to spend which allows you to save so much more than you would if you just spontaneously spend your money.

 

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