*Collaborative Post
How long have you been telling yourself that now is the time to get your money management in order? Well, decluttering your finances is an excellent first step. Read on to get some great tips on how to start becoming organised financially and getting yourself on track to a less stressful life.
Here are four steps to decluttering your finances:
1. Compartmentalise Your Finances
In the same way as you would separate your clothes into different drawers to make things more organised, it makes sense to do something similar with your finances. Setting up separate accounts for bills, savings, travel, emergency funds, and so on gives you greater control and oversight of your money.
It makes sense to keep the money you’ve set aside for a holiday separate from that you use daily. For instance, if you are saving for a holiday in 12 months, this money would be better off in an ISA or savings account rather than a current account. At least then it can earn a little bit of interest.
Similarly, it is pointless having the cash you may require at short notice locked into an account that you cannot access quickly. Compartmentalising your accounts is straightforward with a banking app. Once you’ve set them up, you can move money between accounts instantly.
2. Review What You’re Spending
Another good use for a mobile banking app is to review what you’re regularly spending. You could have direct debits or standing orders for items you no longer need or use fully. Moreover, the price of the things you still need may have risen. Regular reviews of your outgoings allow you to trim your spending. You can cancel items you no longer need and then shop around for better prices on those you want to maintain.
For the regular purchases you want to keep, set the payments up so they leave your account immediately after your income arrives. Doing so will give you a clear picture of what money you have for the remainder of the month. It will also remove the stress of worrying about having sufficient money left for paying essential bills.
3. Get Rid Of Your Debt
Being debt-free is an incredible feeling, and the good news is you can achieve it. A few simple lifestyle changes and sacrifices of some small luxuries can put you on track for a debt-free life.
If you have a considerable amount of debt, it can seem a daunting task, even starting to reduce it. However, you can get started by producing a hit-list of debts to eliminate. You might feel it is best to commence with your most considerable debt, but this is not the best method. You should tackle your debts in order of largest interest rates first. Getting rid of these high-interest debts leaves you more money each month to pay off the lower-interest obligations.
If your debts become out of control or you are overwhelmed by the scale of your debt, consider seeking advice from a debt counsellor. They can provide advice and support to help you tackle your debt.
4. Look After Your Future Self
Getting financially organised means you can enjoy your life much more. However, it’s worthwhile considering your future life too. It isn’t easy to imagine how your retirement will be, particularly if it’s several decades away. However, now is the best time to prepare for your future self’s life. Starting now gives you more time to save for your retirement and the opportunities to amass more money for when you need it most.
Where To Start Saving For Your Retirement
It’s likely you’ve already started saving for your retirement and may not be aware of it. If you’re employed, twenty-two or over, and earn £10,000 or more per year, you should be enrolled in a workplace pension scheme. A sum equivalent to 8% of your gross salary is paid into your workplace pension through your contributions, your employer’s contributions, and government tax relief. If you thought you had no pension savings, this is excellent news and a foundation on which to start saving more. Financial planning can be complex. It is always recommended that you use the services of a regulated advisor like Portafina when making financial decisions.
How About the State Pension?
The age you receive the State Pension is currently the mid-sixties, but this age is likely to increase. If the State Pension is your sole source of retirement income, consider whether this will be enough to sustain you in your retirement years.
Conclusion
Decluttering your finances is satisfying and financially rewarding. Hopefully, these four steps will put you on a track towards a less cluttered financial position and a less stressful life.
