Getting a handle on their personal finances is difficult for many people. Whether the challenge lies in making too little money stretch over too much month, in choosing a sound savings or investment vehicle when interest rates remain so low, or in finding a good deal on a personal loan when one’s credit is less than perfect, money management can be a real headache. Most of us are incessantly deluged with advice and information about how to spend, save, invest or borrow money, but not all of that information is reliable, and the experts often seem to contradict each other. To add to the confusion, our politicians are continually introducing new laws and regulations that affect our finances. Like most changes, these new rules are generally a mixed bag, improving things for some folks and not so much for others.
How can anyone keep on track with his or her financial goals in this data-laden, constantly changing milieu? To slightly misquote a recently revived and much overused motivational meme, keep calm and read on.
Make informed (and sober) choices
The fact that there is a lot of unreliable information out there doesn’t mean that all of it is bad – quite the contrary. And although some decisions in life have to be made on the fly, many if not most money decisions do not fall into this category, and you shouldn’t make those decisions without carefully weighing all of your options and, of course, consulting a qualified adviser when necessary.
Consider personal loans, for example. If you have superb credit, getting a good deal on a loan will be easier for you than it is for people with poor or no credit. Regardless of credit rating, however, there are so many options in the highly competitive lending market that anyone shopping for a loan needs to do his or her homework. If you’re desperate for an influx of cash you might be tempted to take the first offer you get, but don’t succumb to temptation. Shop around using sites like Readies. Become informed about various lenders and their rates and terms, any “hidden” fees they’re likely to charge, and their customer service record. Even if your choices are limited, you still do have choices, and researching will help you make the best one.
You may think that taking out a loan is no big deal, but the way you handle that loan will affect your credit rating, which can have a profound effect on your entire financial life, including your ability to get future loans when needed. So even if it’s just a small loan, take it seriously.
Exercise the same diligence when choosing a savings or investment vehicle. With so much competition in these segments, and so many clever adverts about great deals, deciding upon the best one can be confusing. Interest rates being as low as they are, you’re most likely not going to get rich overnight (or possibly ever) through saving and investing. But some banks and investments really do offer better returns than do others – so again, shop around.
Make informed choices in your everyday spending as well. For many people, taking control of personal finances means getting their spending under control, and for many of these folks, the key to controlling spending lies in developing impulse control. Learn to think before you buy, and to question whether you really need the item in question. This doesn’t mean you can’t occasionally splurge on some bright shiny object, but making a habit of splurging is one of the quickest ways to lose control of your finances.
You should also try to get the best deal possible for necessary services such as insurance, electricity or mobile phones. Again, do your research and make sure you’re getting the most for your money.
And one more point: don’t mix shopping and booze. If you’re going to indulge in a few glasses of wine at home, stay far away from the Internet. Turn on the telly instead (just not on a home shopping channel). Online stores love it when people get a little tipsy and fill up their shopping carts, but your budget will not love it, and you may end up with much more of a hangover than you can handle.
Keep up with laws and regulations
No matter how well informed you are about your own finances and about larger economic issues, many things can change overnight with new laws. So along with keeping informed about financial products and consumer goods and services, you should also keep current on laws that can affect you financially.
As of April 2016, for instance, a host of new laws and policies have gone into effect, creating big changes for people living and working in the UK. These laws encompass everything from an increase in council taxes and stamp duty for millions of people, to a rise in the National Living Wage, to a change in the way state pensions are paid.
The media are doing a pretty thorough job of covering these changes, and the Government web site is a good general resource to help keep you informed on changes in benefits and schemes that can affect your financial well being.
Get back to basics if you need to
Good money managers are made, not born. If your parents didn’t teach you good money habits and you didn’t learn them in school, don’t fret; it’s never too late to get started. Debt charities such as the Money Advice Service offer a wealth of reliable information that can set you on the road to sound money management. These resources can guide you through making a budget, cutting household bills, getting out of debt and setting savings goals.
With a little determination and willpower, and a willingness to ask for help when you need it, there’s no reason that you can’t take complete control of your personal finances. You might even find that it helps you enjoy life more, because you’ve one less worry.