Welcome to this week's Finance Fridays. Last week we were looking at staying safe on eBay. This week I've sharing some tips on how to get your finances in good order. With all of having such busy lives it can be easy for us to take our eyes off things. So take a moment to see if there are some areas where your finances could do with a little work.
1. In and out – Sit down and make a list of everything that you earn each month and any other income you receive. Then write down what you need to spend – mortgage/rent, gas, electric, water, council tax, phone and broadband, car and travel costs, and any insurance. Work out what is left and see exactly what you are spending the rest of your money on.
2. Bank online – This makes it easy to keep track of what is going in and out of your account on a daily basis. Are there payments you don't recognise? Do you still pay for direct debits for subscriptions you no longer use?
3. Check interest rates – This applies to both savings and borrowing rates. Instant access savings rates have been extremely low for some time but if you can look into fixed term accounts. If you are paying the Standard Variable Rate (SVR) for your mortgage talk to your lender about moving to a lower rate. Also check the interest rate on other loans you have such as credit cards.
4. Build up reserves – As a former financial adviser I would say everybody should try and have an emergency fund of at least 3 months of income. If possible try to get it up to 6 months' worth. If you lose your job suddenly then at least you have some breathing room and ability to pay for the essentials in the short term.
5. Review your credit report – You can do this for free with companies such Experian and Equifax. Do make sure you cancel before the trial period is up. If there are any financial transactions you don't know about get in touch with the companies and find out what they are about.
6. Review life assurance policies – Many people take out life assurance when they buy a house or when their first child was born. If your circumstances have changed since then check to see if your cover is enough. Alternatively if the kids have left home or you have downsized your house you could trim cut the cost of your monthly payment.
7. Pay off debts – Easier said than done but ignoring them will make them worse. See if you can switch any to a lower rate or even 0%. Work you which debt is accumulating the highest amount of interest and start to work on paying that one off first.
8. Keep within your means – Many people get into financial difficulties by trying to keep up with the lifestyles of others. If you can't afford the expensive holidays, clothes, cars and hobbies of friends and acquaintances then don't try to compete. Spending money you don't have in the short term may bring you temporary happiness but in the long term it will bring you debt.
9. Sell what you don't need or use – Decluttering your house has become very fashionable but don't just leave it at the things you can see around you. Go through cupboards, lofts and garages to see what is unwanted and saleable.
10. Get rewarded for what you do buy – We can't go without spending money but what you do buy try and get money back from it. Search online for discount codes and use cashback sites such as Quidco or Top Cashback.
Do you regularly review your finances? Have you saved money but using any of the tips above?
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