Five steps to help you take control of your finances in 2024
Here, Wrekin’s debt and energy manager Dan Bebbington sets out five steps to help you take control of your finances in 2024.
Taking control of your money opens doors to greater stability, security, and even freedom to pursue your goals. Here are some steps you can take to get started.
1. Assess your current situation.
Use budgeting apps, spreadsheets, or even pen and paper to track your income and every expense for a month. Categorise your spending to identify areas for potential savings.
List all your debts, including amounts owed, interest rates, and minimum payments. Prioritise them based on interest rates or urgency. High-interest debts like credit cards should be tackled first.
Check your credit score. Your credit score impacts loan terms and your ability to rent or buy certain things. Check your score for free from agencies like Experian, Equifax and Trans Union and address any errors
2. Set your financial goals.
Separate them into short-term and long-term. Short-term goals could be paying off specific debts, building an emergency fund, or saving for a holiday. Make sure they're achievable within a few months.
For long-term goals, think about bigger aspirations like buying a house, retiring comfortably, or starting a family. These will guide your long-term financial decisions.
3. Create a budget and stick to it.
Allocate your income towards your expenses, savings goals, and debt repayments. Use the 50/30/20 rule as a guideline: 50% for essentials (housing, food, utilities), 30% for discretionary spending (entertainment, hobbies), and 20% for savings and debt.
Adjust your budget as needed based on your income and expenses.
4. Reduce your expenses.
Identify areas where you can cut back. Can you cook more at home instead of eating out? Can you switch to a cheaper phone plan or entertainment subscription? Consider negotiating lower rates for bills or finding cheaper alternatives for necessities.
Look for ways to earn extra income. Could you take on a second job, sell unused items, or freelance your skills?
5. Invest in your financial knowledge.
Read books, listen to podcasts, or take online courses about personal finance. Learn about budgeting and other financial concepts.
Seek professional advice if needed. Debt advisors can offer personalised guidance and tailor strategies to your specific situation.
Remember:
- Progress takes time: Don't get discouraged if you don't see results overnight. Track your progress and celebrate your achievements, no matter how small.
- Be flexible: Unexpected things happen. Be prepared to adjust your plans as needed.
- Don't be afraid to seek help: There are plenty of resources available to help you on your journey. Don't hesitate to reach out to friends, family, or professional services for support and guidance.
- Getting on top of your finances is a continuous process. By taking consistent steps, educating yourself, and seeking help when needed, you can create a foundation for financial stability and achieve your financial goals.
If you are struggling with money at all, please do not hesitate to get in touch with our Money Matters team.
4th January 2024