October 22nd 2024.
Living in the moment is easy, especially when it comes to your finances. With the rising cost of living, it's hard enough to keep up with today's bills, let alone think about what "future you" might need. However, taking a few simple steps now to manage your money could have a significant impact on your future prosperity, both in the next few years and during retirement. And trust me, future you will be grateful.
First and foremost, it's important to deal with any outstanding debt. Unless it's your student loan or mortgage, it's best to handle it as soon as possible. Not only will this help you become more financially resilient, but missing a payment on any form of debt can also harm your credit rating, making it harder to secure loans or mortgages in the future.
According to Claire Dwyer, head of investment companies at Fidelity, tackling debt should be your top priority. Credit cards and personal loans often come with high interest rates, which can add up over time. It's essential to pay off the highest interest-rate debt first, which is typically a credit card if you're not paying it off in full every month.
If you're able to, consider setting up a direct debit that pays off your entire credit card debt each month. This way, you won't have to worry about accruing unnecessary interest. If that's not an option, try to pay more than the minimum amount each month to reduce the debt faster. Another option is to transfer your credit card balance to a 0% balance transfer card, which will give you a year to pay off the debt without any interest. Just be sure to make at least the minimum payment each month to avoid interest charges.
If you have a personal loan, check if there are any penalties for paying it off early. If not, it might be worth clearing the debt to improve your financial resilience. And if you feel overwhelmed and need assistance, don't hesitate to reach out to organizations like StepChange, a charity that provides free debt help and advice.
In addition to managing debt, it's crucial to have an emergency fund. You never know when a rainy day might come, whether it's unexpected car repairs or a broken boiler. Experts recommend having at least three months' worth of expenses saved up, but even a few hundred pounds can make a difference in a financial emergency.
The good news is, you can build up an emergency fund without even noticing by using technology. Many banking apps allow you to round up your spending to the nearest pound and put the excess into a savings pot. You can also download specific apps with AI technology to help you save money effortlessly.
Another option is a regular saver account, which allows you to put a small amount away each month while earning interest. Some current account providers offer these accounts with high interest rates, such as First Direct's seven percent and Nationwide's 6.5 percent for a year. Set up automatic monthly payments from your paycheck into one of these accounts, and you won't even miss the money. Just make sure to check the account's withdrawal policy and contribute every month to receive the high interest rates.
In conclusion, although it may be tempting to live in the moment and put off thinking about the future, it's essential to take small steps now to ensure a more prosperous financial future. By managing debt and building an emergency fund, you'll thank yourself in the long run. Trust me, future you will be grateful for your financial savvy.
Living in the present is something that comes naturally to most of us, especially when it comes to our finances. With the rising cost of living, it's hard enough to make ends meet for today, let alone think about what we might need in the future. However, taking a few simple steps now towards managing our money better can lead to a more prosperous future, both in the short and long term. And trust me, future you will be thanking you for it.
The first step towards securing a better financial future is to deal with any debt you may have. Unless it's your student loan or mortgage, it's important to get rid of it as soon as possible. Not only will this help you become more financially resilient, but it will also prevent any negative impact on your credit score. A missed payment on any form of debt can make it harder for you to secure a home or car loan in the future.
According to Claire Dwyer, head of investment companies at Fidelity, dealing with high-interest debt should be your top priority. This usually includes credit cards, which can have a significant impact on your finances in the long run. If you're unable to pay off your credit card balance in full each month, it's best to set up a direct debit that automatically clears the debt. This will help you avoid unnecessary interest charges. If that's not possible, try to pay more than the minimum amount each month to pay off the debt faster.
For those with a good credit score, it may be worth considering a zero per cent balance transfer credit card. This will give you some breathing room to pay off your debt without any interest charges. However, it's important to make sure you always make the minimum payment and have a plan in place to clear the debt before the zero per cent offer ends.
If you have a personal loan, it's worth checking if there are any penalties for paying it off faster. If not, clearing this debt can also help you become more financially resilient. And if you feel overwhelmed by your debt, don't hesitate to seek professional help from organizations like StepChange, which offer free debt advice and planning to help you get back on track.
Another important step towards securing your financial future is to automate an emergency fund. We all know that unexpected expenses can arise at any time, whether it's a broken car or a faulty boiler. That's why it's crucial to have some savings set aside for rainy days. Experts recommend having at least three months' worth of expenses in an easily accessible emergency fund. But even a small amount, like a few hundred pounds, can make a big difference in times of need.
Luckily, there are now many ways to build up an emergency fund without even noticing. Some banks offer the option to round up your spending to the nearest pound and put the extra amount into a savings pot. This is a painless way to save and can be easily set up through your banking app. Alternatively, a regular saver account can also help you build up savings while earning interest. Many current account providers offer these accounts, and it's best to set up an automatic monthly payment on your payday to ensure you don't miss a contribution.
For example, First Direct's regular saver account allows you to put in £300 a month and earns seven per cent interest, while Nationwide's account allows up to £250 a month with a fixed interest rate of 6.5 per cent for a year. Make sure to choose an account that allows withdrawals and commit to putting in money every month to take advantage of the high interest rates.
In conclusion, taking these simple steps towards managing your money better now can have a significant impact on your financial future. Don't wait for tomorrow, start today and thank yourself later.
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