Financial management can be tricky, but in 2020, people are facing more money issues than usual. With the COVID-19 pandemic wreaking havoc around the world, businesses are closing, and unemployment is rising. Whether you’re on a reduced income or you simply want to take control of your money, these handy tips will give you the confidence you need to improve your financial health.
1. Assess Your Current Financial Situation
When money troubles occur, it’s easy to bury your head in the sand and hope that things will improve. Conversely, when you’re doing well, it’s tempting to treat yourself to some luxuries and lose track of what your bank balance is.
Until you sit down and familiarise yourself with your finances, you won’t be able to take action to improve your financial health. Examine your payslips and/or bank statements to determine exactly what your income and expenditure is. Once you’ve done this, you’ll have all the information you need to take a proactive approach to money management.
2. Cut Your Expenditure
Most people have unnecessary outgoings, even if they don’t realise it. In fact, you could be spending hundreds of pounds a month on things you don’t really need or want. By looking over bank statements from the past twelve months, you’ll see payments that you’d forgotten about. Unused subscriptions or memberships that you no longer use can quickly be cancelled, providing you’re not still tied into a long-term contract.
In addition to this, get in touch with your utilities provider and see whether they can offer you a better deal. A simple comparison search will let you know whether you could be paying cheaper rates elsewhere and, if so, how to go about changing providers.
3. Identify Essential Bills
Your essential bills are the costs that you absolutely must pay every month. These typically include things like your rent or mortgage, utility bills, council tax and food. In reality, you might have other important bills that you consider to be essential.
If you need to pay for public transport in order to get to work, for example, this is going to be a high priority. Similarly, if you can only get your kids to school by car, then petrol, vehicle maintenance, insurance and car tax are going to be important costs for you to cover. List your outgoings in order of importance, so you can easily determine which bills should take precedence over others.
4. Create a Budget
Everyone who practices good money management has a budget. It’s the only way to keep track of your income and outgoings, so it’s well worth taking the time to devise an accurate budget you can stick to.
Start with your essential bills and work your way down the list of your outgoings. This will enable you to factor the most important costs into your budget first. If you realise that your outgoings exceed your income, there’s no need to panic. Taking control of your finances can be daunting at first, but you’ll be relieved once you’ve got a workable budget in place.
5. Check Your Borrowing Power
Even if you don’t want to take out a loan right now, it’s good to know what your options are. Check your borrowing power to determine how much you would be eligible to borrow and on what terms. Remember – don’t stick strictly to high street banks or traditional loan providers.
Many alternative options, such as direct payday loans, offer impressively low interest rates. If you need to access funding from a reputable payday loan company, for example, this provider can help. With low rates and super-fast turnaround times, Payday UK make it easy to access loans when you need to.
6. Boost Your Income
Everyone wants to earn more money, but 2020 might not be the right time to try and insist that your boss gives you a raise. All businesses are under increasing pressure due to the impact of coronavirus and many firms are reducing their workforce and making people redundant. However, this shouldn’t prevent you from boosting your income.
Taking on a second job or starting your own side hustle can be a great way to increase your monthly income. With the right side hustle, you can even choose your own hours and do something you enjoy to bring in some extra cash. Furthermore, having a second source of income gives you more protection if your primary job is in jeopardy.
7. Have a Contingency Plan
Many people are worried about job security and a significant number of people are likely to experience a drop in income over the coming months. The anxiety this causes is understandable, but having a contingency plan in place can help to ease your mind and calm your nerves.
Take a look at what government support you would be entitled to if your main source of income was no longer available. You might be surprised at how much financial help is available. Alternatively, consider alternative ways to replace lost income. If you own your home, you may want to rent a room to a lodger, for example. Alternatively, if you’re currently renting, you may want to move in with family or friends until you can secure a new job role.
With any luck, your current job will remain secure and you won’t face a significant drop in income. However, having a contingency plan in place will ensure you’re able to cope with whatever financial circumstances you might face.
8. Find Free Hobbies
When you’re on a mission to improve your financial health, you’ll want to avoid spending money unnecessarily. By finding free hobbies and pastimes, you can dramatically reduce the amount you spend on entertainment and leisure.
Instead of going to the gym, for example, why not take up jogging or start working out at home? Many people have reached impressive fitness goals at home during lockdown, so this could be a great way to improve your physical and financial health.
Alternatively, walking, gardening, puzzling, reading, meditation and learning something new are all worthwhile pastimes that don’t require a big investment. In addition to this, volunteering in your local community can be a great way to spend your spare time. As well as increasing your social circle, you’ll be helping people and causes that are in need of support, while saving yourself some money in the process.
9. Seek Professional Advice
If you’re worried about your financial situation or your finances are getting out of hand, it’s important to seek advice from reputable resources. There are a number of charities that provide people with financial advice and assistance, so don’t hesitate to reach out if you need to. Banks, building societies and businesses are well aware of the financial pressure people are under this year and many have implemented schemes to help people reduce their monthly payments or reduce interest rates. Get in touch with your creditors to see whether you qualify for any help.
Take Control of Your Finances
No matter what your financial situation is, taking control of your finances will stand you in good stead for the future. With the knowledge and confidence to practice good money management, you can ensure that your financial health continues to improve in 2020 and beyond.
