Being financially stable is a goal of most UK adults, but it can be hard to achieve. From unexpected expenses to debts, finding your way through the financial woods can be a challenge.
Here are four habits you should adopt to help make your financial situation better.
Creating a budget
A good habit to have is keeping an eye on your income and outgoings. If you haven’t done this for a while, now is the time.
Make a spreadsheet comparing the two and you can see how much you will have left at the end of each month for spending or saving. This will also help you to identify any areas of excessive spending that could be cut down.
Building an emergency fund
An emergency fund is something that all adults should have. Sometimes machines break down or you smash your glasses and have to pay for replacements. These unexpected payments can ruin your budget for the month and lead you to having to borrow money.
Building an emergency fund will take time but it is invaluable once it is set up. Look at your budget and see what you can realistically set aside each month. Keep it in a separate bank account with a decent interest rate to maximise your funds.
Paying off debt strategically
Having debt can cast a dark mental cloud, so it is better to tackle it rather than ignore it. Prioritise high-interest debts as they result in your paying more money the longer they exist.
If you are struggling, don’t be afraid to get in touch with your creditors. They can work towards a payment plan with you which will ease the financial pressure.
Getting rid of your debts will mean you have much more financial freedom and you will improve your credit score.
Monitoring and improving your credit score
A good credit score is essential for being able to embrace financial opportunities. If you do need to borrow, a healthy credit score will allow you to have favourable interest rates, higher credit limits and a better chance of being approved for a loan or credit card.
It’s important to choose the right credit card. Making payments on time and using the card wisely can help you build a credit history and prove to lenders that you are responsible and safe to lend to.
There are ways you can improve your credit score. One of the quickest ways to give it a boost is to register to vote. This instantly proves your address which helps your score.
You should also check your credit report for any errors. This could be misspelt names and addresses or erroneous loans that you didn’t take out. Contact your lender to have any mistakes corrected right away.
