If you are wondering why you never seem to feel in control of your finances, don’t worry because you’re not alone. A recent study by Aviva Insurance revealed that 86% of people are very concerned about money, but that it’s not money alone that buys happiness – it’s being in control of it.
I know it’s hard to believe that Cheryl Cole or David Beckham might be unhappy if they were not managing their money properly, but it seems to be true. Happiness, well being and self-esteem are all linked with how well we manage our finances, no matter how little we might have.
The report showed that 25% of people don’t even know how much they owe on their credit card, and 52% of women felt that they were confused or didn’t understand financial information. So it would seem that a good many of us are getting confused by debit, credit, and horrible sounding things like ‘fiscal drag’.
But getting on top of your financial situation doesn’t have to be that difficult. Yes, it might be boring, but taking a good hard look at your finances is the key to not being stressed about money.
Have a Plan
Everyone loves a man with a plan, but it’s even more vital that you think ahead when it comes to money. The first thing you need to do, is write down everything you earn, and everything you spend. If you find it hard to remember what you spend, keep a spending diary. It will help you keep track of how much you’re spending. You really can’t get on top of your finances until you understand how and why you spend, and what money means to you. Once you have your finances under control, you can start to think about saving.
Spending and Budgeting
People spend money for all sorts of different reasons, so it’s important to know why you are spending in the first place. Maybe you keep yourself under control and don’t splurge on expensive items, but what about the little things? A copy of Heat, a cappuccino and a muffin totals about £7, but often, we just buy them to kill time. Or perhaps you skimp on the smaller items, and splash out on a pair of killer heels instead of budgeting for the rent. The important thing is to think about why you’re spending. Is it because you really need something, or just for the feel-good factor? Buying shoes certainly feels good, but try and think how happy you’ll be when you get the credit card bill, or see your bank statement. If you don’t need it, the chances are you’re just spending for the sake of it.
Have A Goal
Remember that budgeting doesn’t have to mean you make yourself miserable. As you hold back your spending, you might start to notice that you have a bit more money left over at the end of the month. And by setting a goal, it gives you an incentive to save not spend. Your goal could be to save for a holiday, pay off a debt, or cut your food bill. It doesn’t matter what it is – if you achieve it, you’ll feel you’re making real progress, and want to do even more!
Saving
Starting to save money for a rainy day will give you a lot more peace of mind, but 35% of people have less than £500 saved, and 20% have no savings at all. So if you lose your job, you could be in real trouble . It’s recommended that you have at least 3 months salary to tide you over should you find yourself suddenly out of work. So next time you have a bit of spare cash, tuck it away and don’t spend it. You never know when you might need it!
Squirreling Away
The best way to keep on top of your finances, is to separate your spending. If you can, have different bank accounts for different things. You should always have a separate savings account, but splitting your finances into separate areas will help you budget. For example, it’s worth setting up a direct debit from the account your salary goes into, to send money into a separate account for paying your bills and rent the day after you get paid. This way, you can keep track of what you’re spending and you know that you have the important expenses covered. Anything left, you can save!
Remember that no matter how little money you have, it’s always possible to manage it sensibly. If you are in debt, and are having trouble with repayments, get help, or consider a consolidation loan. For more information on debt, click here.
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