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There isn’t a lesson in school that teaches you how to manage your money, that once you are an adult, bringing in an income that you will have to juggle and manage your money to stay in budget and the black. That no one is going to guide you to deal with the pressure that comes with running a family and a home. In fact, research shows that 48% of British adults worry about money regularly, with 16% admitting to stressing about it daily. Surprisingly, the survey showed that 55% of people feel shame and uncomfortable opening up about their financial situation. No one wants to be in a position where they are constantly worried about managing money. When you manage your finances well, it will help lift some of the burdens. Let’s consider how best to manage your money with 10 simple rules.

How to Manage your Finances

Managing your finances can often feel overwhelming when you consider your income vs your expenses and any debts you may have acquired. Still, it makes sense to maintain a level head so you can stay in control.

Photo by Yan Krukov from Pexels

1. Do a full check over your finances

There is no point in moving forward unless you are brutally honest with yourself from the outset. Scary as it sounds, you need to take stock of your situation. Write everything down and be honest!

2. Check in with your finances daily

If you struggle to keep on top of your finances, especially with your overspending, then one tip on managing money is to do a daily inventory of your spending. Many diaries having financial planning sections and even a quick excel spreadsheet can help you keep track.

Sometimes, however, if you need more support with your spending, apps like Yolt can help you monitor your spending and if you haven’t already, get an online app to manage your bank account.

3. Take a look at your income vs your expenditure

In the early stages of getting in control of your money, it should be a priority to look at your income and expenditure as there would be no point putting plans in place if the income isn’t there or your expenditure is high. If you realise your income is lower, consider if you can increase your income, perhaps with a side hustle.

Before jumping on board with trying to create more income, is there anywhere you can save on your expenditure? Cancelling that never used gym membership, walking to work rather than getting the bus, and cutting out takeaways or manicures. You could end up saving over £500 a year!

Remember: small actions can prevent a major financial disaster in the future.

4. Pay off any outstanding debts

All debt should be taken seriously, as all the time you have debt hanging over your head, it will affect your budget. Paying any outstanding debt should be a priority. Consider different repayment strategies and choose one that works for you. Then create a plan and start clearing your debts.

5. Build an Emergency Fund

Being in debt or struggling on a low income often means there isn’t much money left for saving. However, you should have an emergency fund in place in case life throws a few large expenses your way. If you don’t already have one, the best way forward is to open a separate savings account, as it will stop you from easily spending these funds and contribute an affordable amount when you receive your wages. It doesn’t have to be a lot; the more you save, the better and more confident you will feel.

Crop woman counting money at modern office table
Photo by Karolina Grabowska from Pexels

6. Set up the bank and savings accounts

If you are in serious debt, sometimes it pays to be prepared. Ensure you have the correct bank accounts and if you are in debt with your main bank account. Open a new basic account with a new bank. You won’t be able to access an overdraft facility, but it means that if the worst happens and your main bank closes your account, you still have access to money.

From experience, you need:

  1. Bills and expenses only (Things related to cars, houses, insurance etc)
  2. Living expenses (coffees, eating out, clothes shopping)
  3. Savings account

7. Understanding your credit score

If you’ve never accessed your credit score, I suggest ordering a copy of your credit report to see where you stand financially. If you find it’s less than satisfactory, then take action to improve your credit score. Check for errors, make sure there are no huge missed debts like CCJ’s or defaults as these will majorly impact your score for six years.

The best way to improve your credit score is by making payments on time and keeping the amount of credit you borrow low. Unfortunately, if you want to rebuild your credit, it usually takes time, and there is no quick fix.

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8. Look into where you can make savings on everyday items

When considering everyday purchases, consider cost comparison websites like USwitch, compare the market and confused.com. If you want to save on shopping, consider using cashback websites like Quidco or top cashback UK, where you can build up quite a bit of saving towards paying back debts or Christmas shopping.

9. Make a Budget to help you manage your money

How to best manage your money starts with a budget! I know it sounds dull and time-consuming, but you haven’t completed all the previous steps not to get a handle on your finances. You need a plan, and you need to stick to it. You can’t continue to free-ride your finances. Get a plan in place!

10. Consider your Future

Considering all the tips above, it was natural to have to mention investments and retirement. It sounds like a long way off, but thankfully employers in the UK now have to offer some type of pension scheme to their employees, which is something to take advantage of, whatever your age.

Investing is another way to save for the future. Investing over a long period can lead to a greater return on investments. If you start early, you’ll be able to start small and watch your money grow over time.

Piggy bank with future written on it surrounded by money
Photo by Alesia Kozik from Pexels

Summary

Managing your money does not need to be complicated, but it is also something you can’t continue to put off. It can be very easy to allow your finances to get out of control before you start to manage them seriously. Implement each of these tips over time. Don’t let yourself get overwhelmed, and take it one step at a time.

Let me know if you’ve found ways to succeed at managing your finances.

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This site contains affiliate links to products. We may receive a commission for purchases made through these links, this is at no cost to you and it is purely at your discretion.

8 Comments

    1. I never had an emergency fund because honestly, I couldn’t afford to save for one. However, I have been saving £5 a week into a savings account which is a great little emergency fund. It’s great seeing it grow. I wish I’d done it earlier.

  1. Hello! These are some great tips, thank you for sharing. I only started to really look after my finances last year. These tips would have really helped. Thanks for the post! Alicia

    1. Thank you Alicia. I only really started last year too. Lockdowns made me sit down and really think about my spending. I am glad the post helped 🙂

  2. Ok I needed this post. I am a big money spender and I am always looking for ways to cut down on my spending. Checking in with your finances daily and taking a look at your income vs your expenditure is such a good one. I’ll put these tips into use. Thank you for sharing.

    1. You are welcome. I find it’s so hard to juggle finances. I told myself last year that from 2020 I needed to be more aware and save! I have no emergency fund! Scary considering covid etc.

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