We all want to feel more abundant, yet money still seems to be a rude word doesn't it? How can you get your money back on track and really make it work for you? Here's how.
1) Use Cash. Set yourself a weekly amount and go get it from the bank on Monday. Handing real live cash over for a purchase really focuses you and makes you think 'do I really need this?' Using a card is too abstract, it feels like you're only moving numbers about, where as using cash feels more real. It also looks nice if you open your wallet or purse and there are nice shiny notes there. A card doesn't have the same feel at all! Using cash makes you feel richer, as you've got 'money' to spend!
If you have any money left over at the end of the week, either put it into a savings account or keep it in a pretty tin or box and use it as your 'slush fund'. Dip in to it only when you really need to or watch it grow over the months. Or add it to next weeks shopping allowance!
2) Check your bank regularly. Use internet banking and make a point of checking your statements regularly. If you do this every day or even every other day, you will soon get to grips with where your money is going and how much you have left. If internet banking is not for you make a point of getting a mini-statement from the cash point when you withdraw your cash every week.
3) Create an online calendar. If you have monthly direct debits going out, it can really help to set up an online calendar. There is usually a calender app installed in your smart phone, or you can use something like Google Calendar. Set up a repeating event for each direct debit, and any incoming payments like salary, benefits, etc. Don't add the amount, just the title, like 'car insurance' or 'water bill'. This means you can watch the flow of money into and out of your account. Make sure of course that your calendar is set to private, so it's for your eyes only.
4) Create a spreadsheet. It may seem a little old fashioned, but keeping a spreadsheet with your incomings and outgoings really makes a difference to managing your money. As you fill in the spreadsheet it should keep a running total of how much you've got available to you. You can check it off against your bank statement.
5.) Calculate and tidy up your debts. If you have any credit card bills, store card balances, mail order catalogue balances or owe friends or family money, its time to work out what you owe and to whom so you can create an action plan of how to get rid of them! If any of your cards are currently still accruing interest, it is vital to move them to a 0% interest free option. Store cards particularly tend to have very high interest rates, so moving them is vital. Ideally move them to an interest free credit card. But sometimes even a regular interest rate credit card could be cheaper than the interest rates on some store cards so be sure to do your homework.
Usually balance transfers incur a small fee to move them but it is often not as much as it would be had you had to pay the interest on them for a month or two where they currently are. If you have several debts scattered about and have access to an interest free balance transfer option, it would be a wise idea to gather up all the debts and put them in the same place, interest free.
6.) It's payback time! Once all your debts are on interest free credit, the tip is to pay off the smallest debt first, whilst paying off the minimum payments on the others of course. Pay as much as you can afford to pay each month, without pushing you into a position where you have to create more debt. You want to avoid going over drawn or adding more to the credit card bill.
If you have only one debt to pay off, don't pay just the minimum if at all possible. It takes forever to pay back a debt if you just pay the minimum. Work out how much you can afford to spend a month on your debt repayments. You could set up a standing order or direct debit for a set amount each month on a continuous basis until the debt is repaid this way you're not having to actively remember to pay the bill every month. Make sure it covers the minimum amount they need and falls at least a few days after the date they calculate your bill.
Once the debts are all paid back set up a direct debit to your savings account and pay your usual credit card bill money directly into your savings account.
7.) Save, Save, Save! Set up a standing order to pay yourself on pay day. This means pay some money into your savings account the minute you get paid. If it goes on pay day you're not going to notice it as much. Ideally you should be looking to save about 5-10% of your incomings but even smaller amounts add up. If you've still got debts, the bulk of your money aside from essentials should be going to repaying the debts instead, so a smaller amount would be a more sensible option. Even if you've got debts, aim to put some money away each month.
8.) Plan ahead! Every year we have big celebrations like Birthdays and Christmas/Yule and so it would be a good idea to set up a completely separate account and put even £10 a week away. If you put £10 away a week for most of the year you're looking at around £500 by Christmas.
9) Don't pay unnecessary tax! If you don't pay tax on your earnings, you might not need to pay tax on your savings, there is a form you have to fill in, which you send to your bank. see http://www.hmrc.gov.uk/forms/r85.pdf
10) Set a savings goal! How much would you like to have saved by this time next year? Set a goal, and then regularly review how far you've got with it. Make the goal achievable but challenging enough to be exciting. If you're hoping to buy something specific with your savings goal, find a photograph of it and print it out and stick it near where you normally sit. Put it in a frame on your desk. Put your goal on a credit card sized post-it note and stick it to your card, to remind you every time you want to use it.
Good luck.
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