Getting
Your Personal Finances in Order - Tips
Your personal finance is extremely important
- it is the cornerstone of who you are. If your
personal finances are not in order then the
situation often just becomes harder and harder
to manage and rectify. Firstly, take a look
at what outstanding credit (debt) you have remaining.
This could be things like credit cards, personal
loans, and similar. Why do you have these debts,
and what are you doing to pay them off?
One
first crucial personal finance tip
is to pay off as much of your debts each month
as you can afford to - do not pay off so much
you cannot eat or drink, but do try to pay off
whatever you can afford to. By doing this you
are reducing the amount of interest you are
being charged each month by the credit provider,
and also reducing your debts faster. Even by
paying off just a small percentage more each
month than normal can often save you hundreds
- if not thousands - of pounds in interest over
time that would have otherwise been charged
on your outstanding debts.
Personal
Finance Tip 2 - Look to acquire assets
rather than liabilities. Assets normally make
you money whereas a liability will simply cost
you money. For example, an asset could be classed
as property (one you could rent out, or generally
goes up in value over time), whereas a liability
could be classed as a car (as it generally goes
down in value the more you use it). Through
buying assets you are getting your personal
finances in shape for the long-term - see them
as investments that you can sell in the future
and realise the cash from, thus giving you a
return on your investment you can use towards
your retirement.
Personal
Finance Tip 3 - If you want a liability,
first create an asset to pay for it. Liability-heavy
people generally have very little net worth
(ie. liquid capital / money in the bank), whereas
asset-heavy people tend to have accumulated
a strong net-worth over time through their investments.
Some asset-heavy people may not have huge volumes
of cash in the bank available for disposal,
however they do have plenty of cash tied up
in their assets which they can sell and realise
the value of whenever they require additional
cashflow. This is not generally possible with
those who are heavy on liabilities.
Personal
Finance Tip 4 - Whatever you already
save, open up another savings account and set
up a standing order to pay £25 per month
into it from your current account. It may not
sound like a great deal of money, but over 5
years it will amount into a useful extra £1500
plus interest, so more likely closer to £2000.
Personal
Finance Tip 5 - Make sure you are taking
full advantage of your annual ISA allowance.
Each year you can save a certain amount completely
tax-free in something called an ISA. There are
various ISA's available from the major banks
all offering differing rates - some are fixed
rate ISA's others are not, some offer better
rates for leaving the money in the ISA and not
touching it all year, so shop around. Either
way, if you don't have an ISA, you are not making
as much as you could be on a certain percentage
of your savings.
Personal
Finance Tip 6 - Saving money by adjusting
your driving style. This is a very simple and
effective tip which can often result in savings
of £10-£20 per month for someone
who commutes in their car every day to work
and back. Firstly when you pull away from traffic
lights or junctions, do not over-rev your engine
and change into a lower gear as soon as possible.
Do not over-accelerate or race around, especially
in town between traffic lights, you won't get
there any quicker during rush hour but you'll
use more fuel rushing between lights! Do not
use cruise control on the motorways - cruise
control actually makes your car much less fuel
efficient. Instead use the throttle to get you
up to speed, then ease off the throttle and
only use it again to bring you back up to a
fairly constant speed. Do not simply keep your
foot down maintaining the 70mph - using 'squirts'
of throttle will reduce fuel consumption and
get your further on the same tank of fuel! Also
try cruising at 5-10mph less than your normal
motorway cruising speed. This also has a positive
effect on your MPG.