6 Financially savvy tips for a healthier bank balance

By Hayley Hemmings
0

Good money management isn’t rocket science – but it can feel like that at times!

Up until a few years ago, I was pretty much in the dark about how to successfully manage my money. Debt was a consistent part of my life and had been for many years. I used credit regularly and often relied on my credit cards to fund big purchases that I really couldn’t afford.

I didn’t have an emergency fund (as I used credit cards whenever I got into a spot of bother) and my idea of a good nest egg mostly revolved around the chocolate ones at Easter than actual savings in the bank. Not exactly the best way to live life as a grown up!

Nowadays though, my finances are in a much healthier state. I don’t have any debt, except for a mortgage and I have a large enough emergency fund that would ensure my survival for a good few months before I need to start worrying. My future self is now thanking me for setting up pension contributions!

Getting my own finances into good shape wasn’t a quick or easy task, but I did learn some great tips and tricks along the way which might help you if you’re trying to develop some sound money habits this January.

1. Establish an emergency fund for those unforeseen problems

This is something you should do first and foremost, because relying on credit to fund emergencies really isn’t a great idea. If you use credit for emergencies, you’ll only have to find money another day to pay back what you’ve borrowed with interest on top.

If you have a lot of debt to pay off, some money experts say that you should throw all your savings at your debt instead – even your emergency fund savings.

However, I believe you should aim to save up a small emergency fund if you have debt, even if it takes a while for you to find to the money for it. £500 is a good amount to start with, so that you have something to fall back on.

My reasoning for having a small emergency fund if you have debt is simply to get into the habit of not relying on credit to fund an emergency. This is such an important money management skill to work on as you’ll appreciate if you’re currently in this position.

If you don’t have debt, your emergency fund should be the equivalent of three to six months’ of your salary. Check out this article for some good tips on building up an emergency fund.

2. Pay off debt before trying to save

Regarding the old “should you pay off debt or save” debate, it does usually make financial sense to pay off your debt rather than put money into a savings account. The interest rates on savings accounts these days is pretty meagre, so you can often put your money to better use by throwing it at your debt instead.

If you want to save a big lump sum for a mortgage deposit or similar, it still makes sense to pay down your debt first, because it’s a case of “the less debt, the better” when it comes to mortgage applications!

3. Use credit as it’s meant to be used (aka properly!)

With all that said about tackling debt and not using credit for emergencies, it’s perfectly ok (and can actually be financially rewarding) to use credit in the way that you’re supposed to.

Paying off your balance in full at the end of the month can do great things for your credit rating – and you can get better financial protection by using credit cards instead of cash.

For example, if you use a credit card to buy goods or even a holiday for an amount between £100 and £30,000, you’ll be covered by “section 75” of the Consumer Credit Act. This basically means that you’ll have a leg to stand on if the company you’ve purchased from doesn’t deliver on the goods or if they go bust.

4. Become David Dickinson

If you want to improve your finances long-term, it’s a good idea to get into the habit of bargain hunting. Grabbing a bargain whenever you can could save you hundreds and even thousands of pounds each year.

Always make sure you’re getting the best deal on your utilities, phone bills, mortgage and insurances by checking out our comparison site.

If you’re shopping for goods, use cashback sites to earn rewards and use cheaper supermarkets like Aldi and Lidl to save extra on groceries. Make it your mission to never pay full price and you’ll soon be reaping the rewards.

5. Buy what you need and not too much else

Little purchases here and there can soon add up and start eating away at your bank balance before you know it. Do away with coffee and magazine purchases and avoid the shops completely if you get tempted to spend for the sake of it. Here’s a guide on how you can cut down on everyday savings - you’ll be surprised how much you can save!

Set yourself a no-spend challenge this January to get started, you’ll be surprised at how resourceful you can be. Use the things that you have and fix things that are broken if you possibly can.

6. Don’t stretch yourself too much financially

If you are going to buy something, make sure you can afford it first before you commit. This is especially the case with big ticket items like a new car on finance, or when you’re buying a home for the first time. It’s easy to get carried away and borrow the maximum amount that you need, just because it’s being offered to you.

One way to think about big purchases like this is to see if you would still be able to afford them if you lost your job or had to take a pay cut. Things like this can and do happen, so it’s worth considering as stretching yourself for a big purchase could prove to be a very costly mistake further down the line!

Top Takeaway

Getting your finances into great shape involves changing your thinking around money altogether and understanding that the changes you make now will help you in the future. Use the tips highlighted above to help you get started!

 

What bad money habit do you have that you’d like to change?

 

Author Bio: Hayley Hemmings is a freelance writer, blogger and tea addict from Yorkshire. She’s passionate about money matters, frugal living and loves anything handmade. When Hayley’s not writing, she’s most likely to be found enjoying snuggles with her little girl or walking her border collie through the beautiful Yorkshire countryside.  

Comments (0)

Log in or register to add your comment
Not a giffgaff member? Register now

giffgaff gameplan

Copyright ©2018 giffgaff

Representative example for a loan of £4,000 for 24 months at an interest rate of 15.5% APR fixed. In this example the total amount payable (including interest and fees) would be £4633.57 and your monthly repayments would be £193.07.

giffgaff receives a fee for introducing personal loans to Retail Money Markets Ltd trading as Ratesetter.

giffgaff gameplan is a trading style of giffgaff Limited, we are a credit broker and not a lender and introduce loan applications to its selected provider of loans Retail Money Market Limited trading as Ratesetter. Terms and conditions apply. Finance subject to status. 18s and over. Credit is provided by Retail Money Market Limited trading as Ratesetter, 6th Floor, 55 Bishopsgate, London EC2N 3AS Ratesetter is authorised and regulated by the Financial Conduct Authority – Firm Reference Number 633741

giffgaff Limited is authorised and regulated by the Financial Conduct Authority, Firm Reference Number - 680957. Registered address – giffgaff Ltd, 260 Bath Road, Slough SL1 4DX. Company Number - 04196996.

Posts on this site reflect the opinion of the members posting only, and not necessarily giffgaff’s opinions or views. There’s a lot of information here that can help you, however, you must remember that we operate an open forum and sometimes messages that are posted are misleading, deceptive, or inaccurate. If you follow these tips, you do so at your own risk. Always do your research and check the terms.