Knowing how to manage your finances plays a huge part in your life, and it could be the difference between falling into hard times and smashing your money goals. Getting ahead financially can mean different things to all of us, whether you’re working towards a goal, or you’re trying to pay off your debt. One of the major benefits of boosting your finances is that you will have the funds to cope with unprecedented expenses without having to risk your cash flow. Read on to find out 5 key tips on how you can get ahead with your money.
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What does it mean to get ahead with your finances?
Getting ahead with your finances means putting yourself in the best position by managing your money in a way that is beneficial to you. There are many ways that you can improve your financial position for the better, such as keeping track of your money more closely so that you can ensure you’re not overspending, creating a savings fund to use in an emergency and paying off any debt that might be holding you back from reaching your money goals. Read on to find out how you can do this.
- Track your spending
This is one of the best places to start when managing your finances. Some of us are guilty of overspending, and spending in areas that are not as important – but this is something that you can change to help you get ahead. You can track your spending easily by downloading an app or writing down a budget so that you can refer to it whenever you need to. It gives you an idea of where your money is going and what you’re spending it on, allowing you to identify impulse buys, and change your habits for the better. It will also reveal any payments and direct debits that you may have forgotten about – like that gym membership or streaming subscription. Getting your finances in order by tracking your spending will alleviate stress and help you to make sensible decisions.
2. Pay off outstanding debt
Unfortunately, if you are still paying off outstanding debt from the past, it is more difficult to get ahead financially. This is because a sum of your income is tied up in repayments. Although it means that you may not have as much money left over each month after you have made a loan repayment, the faster your debt is paid off, the better. Try and pay more off if you can so that the amount becomes less in a faster time frame. Making it a priority to pay down your debt means that you will soon be on the right track to getting ahead financially. Automate and increase your payments so that you are debt-free sooner rather than later!
3. Work on your credit score
Your credit score is going to follow you around for the entirety of your life, so it is essential that you do all you can to work on it and improve it if necessary. Your credit score shows lenders how trustworthy you are when it comes to paying back debt and can have an impact on your ability to be approved for finance if you need it in the future – like car finance, mortgages, and loans. If you have taken a loan out in the past, and have missed payments, or failed to meet the agreed repayment amount, this could have an impact on your credit score, and could eventually lead to bad credit.
To make sure that your credit score does not stop you from securing funds when you need them, you should make sure that you can afford the loans that you are applying for. Pay your bills each month in full and on time, and check that all information on your credit report is correct – something as small as a misspelt name or address can cause your score to plummet.
3. Create an emergency fund
Creating an emergency fund is an essential part of getting ahead financially. You should make it a priority to save a little each month so that you can steadily build up your savings. If you find yourself faced with an emergency, a pot of savings that is separate from your current account means that you are less likely to need to take out a loan – which can set you back in terms of financial security. Just like paying your bills, you should automate moving money from your current account to your savings each month – this way, you can stay consistent. It doesn’t have to be a huge amount, try and choose an amount in line with your income, and add any extra that you may have left over, or you are gifted – think tax rebates and refunds. This way, you will have funds to fall back on if you need them.
4. Set goals
To get ahead financially, you’re going to need to set yourself goals to work towards. If you don’t have a goal that you’d like to achieve, it may seem more difficult to stay motivated. Think about your finances – is there anything you’d specifically like to achieve in the short or long term? It could be anything from saving for a new car, a deposit for a house or retirement. Having something to aim for will keep you consistent and on track and the changes that you are making to achieve your goals won’t feel like such a loss.
Once you’ve thought of a goal, you should make note of it – stick it on post-it notes around your house, write it in the notes section of your phone or stick it on your desk at work. This way you can keep it at the forefront of your mind. If your goal is long-term, break it up into smaller sections so that you can feel accomplished!