Money defines many of your biggest life decisions. Whether you want to own a house, travel the world, or simply treat your friend to a fabulous birthday, what your bank says dictates whether or not you can. It’s important, then, to treat your finances well and get them in order as early as possible.
You don’t need immeasurable wealth to live a comfortable lifestyle; you just need better control of your cash. So, how do you do it? Whether you are fresh out of school and want to set up a better future for yourself or you’re reaching retirement and need a little financial organization to enjoy your retirement, follow these fifteen steps to get your finances in order.
1: Build Emergency Funds
It’s not enough to just account for the bare minimum, as there will always come a time in life where you will need to pay for something out of the blue. It could be a home emergency such as a pipe leak or an anniversary you completely forgot about until the last minute. For this reason, it’s important to build emergency funds for a rainy day. You’ll be grateful once the time comes!
If you ever find yourself in need of emergency funds, but you haven’t yet built them, there are other options such as short term loans that you could utilise. Remember, though, that you must be able to pay the loan back on time without issue. Otherwise, you could well end up in a worse financial situation than before.
2: Set a Budget
A crucial step for better control over your finances is setting a budget and sticking to it. What your budget is, depends entirely on your income and lifestyle. Those who like to live a little more lavishly by going for restaurant meals each week will need a higher budget than those who prefer to stay home and live frugally – wherever you stand, you need to account for it. Of course, you must make sure you can afford those weekly expensive meals before budgeting for them!
3: Use Financial Apps
Financial apps make sorting out your finances much easier. By using a good financial app, you can set your budget, automate your outgoings, and keep track of your saving goals. You should also use your bank’s app, as this will make managing your money so much easier, especially when it comes to transferring cash and seeing how much is in your account. There are plenty of financial apps out there, so use the ones that match your money needs.
4: Invest Your Money
If you want your finances to grow over time, the best way to do that is to invest your money. It takes a fair amount of research to make the right choices, but you could grow a great deal of wealth over the years with enough time and dedication. If one of your financial goals is to save enough for a comfortable (or even luxurious) retirement, investing is the way to go. Money Under 30 will help you start investing even if you don’t have much money, to begin with.
5: Keep Track of Your Credit Score
Your credit score has a say in many of your financial choices. By using a credit check company such as Experian, you can keep track of your score, ensuring that it never dips too low. It’s not just about tracking it, though – you should also actively try to raise it or keep it high. To do this, make sure you pay all your bills on time, make consistent payments, and only apply for loans if you genuinely need them.
6: Reduce General Living Costs
Getting your finances in order usually means an overhaul of your outgoings, especially if you’ve been spending too much and saving too little. You could even use the money saved through your reduced living costs to build emergency funds or savings. Unfortunately, it’s not always easy to cut your budget, especially if you’re used to living a certain way. A couple of ways to manage it include:
- Lower your energy use
Your energy bill is a high monthly cost, so it makes sense to try and reduce it as much as possible. Using automated lights, lowering your wash temperature, and shutting down your computer are all ways to do this. Not only will it help save money, but it’ll also reduce your carbon footprint!
- Do a weekly food shop
Rather than deciding what to eat based on what you’re craving that day, try meal planning and doing a weekly food shop. Of course, you can always top up on items and fresh produce over the week but planning your meals will help reduce the amount of unnecessary and expensive snacks that end up filling your cupboard. You could get into batch cooking, too, to save even more cash.
- Have fun inside the house
Whether you want to hang out with friends or go on a date, you can reduce the cost by doing it inside from time to time. Drinks bought for the home are often far less expensive than those served at a bar!
7: Set Financial Goals
An important part of getting your finances in order is determining exactly what your goals are. For example, do you want to be free of debt? Is your goal to have high six-figure savings by the time you retire? Whatever your goals are, by defining them, you’ll have a much easier time figuring out how much you need to save.
8: Pay off Your Debt
Debt can hang over you for a long time, but you shouldn’t let it. While it might not be as simple as clicking your fingers and watching the debt melt away, there are plenty of ways to get it out from under you. By sticking to regular, monthly payments, you’ll be more secure in the fact that eventually, the debt will be fully paid off.
9: Be Aware of Scams
Many scams are circulating the web, including emails asking you to click on malicious links and pop-ups that convince people they need to pay a certain amount. To make sure you don’t fall into a scammer’s trap, educate yourself on common online scams and stay far away from them. In addition, if you ever receive an email from a company you trust, confirm it is them before clicking on any links, and never give up your credit card information to any kind of email link.
10: Set Up a Savings Account
A savings account is a must for most people, as it allows you to put in small (or large) chunks of money that will build over time. So, whether you want to save for a getaway, a house deposit, or a great Christmas for your kids, a savings account will allow you to do that. Don’t forget to build lifelong savings, too, as you likely won’t be working forever!
11: Write a Will
It’s normal to consider money matters for yourself, but what about the people you’ll one day leave behind? If you’re middle age or older, it’s a sensible idea to write a will ensuring all your money goes exactly where you want it.
12: Talk to a Financial Advisor
If you’re struggling to organize your finances or have big goals you can’t figure out how to reach, talking to a financial advisor can help. While it is a cost in itself, it’s a cost that provides enough benefits to warrant it.
13: Write a List of Items You Must Buy
When you have several items that you want to buy, you can often forget what you need and when you need it. The last thing that you want is to realize your spouse’s birthday is around the corner, and you have not accounted for it in your budget! So, to make sure you get through everything you want/need to buy, write a list of all the items. Try to list them in order or priority, too, so that you get the essentials out of the way first.
14: Set Payment Reminders
Payment reminders are a great way to ensure you know when payments need to go out. Whether you are sending out an invoice or manually paying a bill, you are more likely to do it on time with payment reminders, so make sure you set them up for every repetitive outgoing payment you make.
15: Define Essentials Vs. Luxuries
Many people make the miscalculation of assuming that their luxuries are essential and thus spend far too much money on things that don’t actually make much of a difference to their life. While that Starbucks coffee might seem like a must, there are plenty of ways to get your morning caffeine fix for more than half of the price. Don’t worry – you can still treat yourself from time to time, but make sure you know what a treat is and what is a need, as it will help you set a more sensible budget.
Sorting out your finances can take some time, which is why it’s important to start sooner rather than later. Once you have your money under control, you will feel less overwhelmed by the next energy bill or holiday season.
By Dan Cormac
Bio: Dan Cormac knows how to make his money go further. A freelance financial journalist, Dan is passionate about personal finance. Whether you hope to escape the chains of debt, to save for a house, or to retire within a decade, Dan explores the most effective ways you can achieve your financial goals.