Our top 10 tips for managing your personal finances

Personal finance is, and always will be, an everyday consideration for most. 

With more and more websites aiming to help individuals manage their personal finances, this piece, that condenses the major considerations, is an easy read to help you manage your finances.

Start with your budget 

Having roughly worked out your net worth, you will want to start by setting up your budget.

You will need to work out all of your monthly inflows and expenses. You should be able to identify where all of your expenses are to truly work out if your current finances are sustainable. If your expenses exceed your income, major changes need to be made to rectify this.

Purge all of your expenses, if there are any outgoings that cannot be deemed as necessary or justified, reduce them. Certain services often appear negligible, but when accumulated over the course of a year, when combined with other smaller expenses, really add up. 

Hopefully you have or can now create income to be higher than expenses, including money aside for a rainy day or savings. 

Focus on the high-interest debts

Having made a clear note of your incoming and outgoing, and hopefully having reduced your expenses, you can now identify which expenses you should be focusing on first. 

Some expenses are inevitable, a rent or mortgage for instance, but where other debts exist, such as credit cards, you should be focusing on those with the highest rates of interest. The more you can focus on these expenses, the less the total expenditure going forward with reduced interest payments owed.

Another word of advice here, a balance transfer can be beneficial to those with larger sums on high interest credit cards. Some providers will offer 0% over 12 or 18 months, and often cover the cost of the transfer itself. 

You really have little to lose here, compare prices and find a good deal to balance transfer to a 0% or low interest credit card.

Focus on savings

This was touched on earlier but building funds in a high interest savings account is a very smart move. Ultimately life happens, emergencies can spring up on us at any time, and you want to avoid plunging into debt to pay for these unexpected expenses. 

Of course, everyone would love to have money saved but do not always feel it is possible. Where possible, you need to allocate some of your income to put into a savings account – as much as you can without building debt elsewhere.

You may also be asking whether to prioritise paying off high interest cards over building savings. Generally speaking, you will want to focus on paying off high interest debts before building a savings amount but finding a balance here is important. You can also increase the amount you allocate to your savings once high interest cards are dealt with it also helps eliminate stress in having multiple debts.

Pay off remaining debts

By other debts, we are thinking long term debts like a mortgage. Your focus now should be to pay off your house. 

You can begin to realise major favourable changes between income and expenses, and you can begin to rapidly grow your money from here on out.

Identify high yielding investments

At this point, you may begin to see your income grow when compared against your expenditures. This is great, but many fall into the trap of building savings in an account but not benefiting from any major rise in interest rates. 

Here, and where you have built up some savings, you should be identifying high yielding investment opportunities. There are many ways to invest, realising far greater returns than with savings accounts. One such example is an investment in a loan note. 

Loan note investing is growing hugely in popularity and is fast becoming one of the most profitable investments you can make. Investors are able to purchase loan notes within areas such as property, with this money used to raise funds for property developers, proving a popular choice for both parties. 

They are flexible for the developer, as they do not have to go through the process of the bank, but equally the investors’ money is arguably more secure than with traditional investments. Charges are placed over the asset meaning if on the small chance the developer defaults on the loan, the asset is repossessed on behalf of the investor. FJP Investment have over six years of experience and hundreds of happy clients within the area of loan notes. 

Giving something back

Having secured your financial position through strategically paying off debts and investing in a smart way, you may now be in a position to give something back. The amount here depends on the position you are in, and this does not necessarily need to come at this point, it may come earlier, it is just a little easier at this time. 

Charitable donations and cash gifts are a fantastic thing you can do to help support those that truly need it. It also keeps you grounded and prevents you from no longer valuing money in the way you once did. 

Dealing with money is always a particularly stressful thing to deal with. Following the above tips, hopefully the process of managing your money and growing your disposable money will be just a little less stressful. 

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