Whether it’s unexpected property maintenance or redundancy, it’s essential that you feel confident in your financial situation. Research from Aegon indicates this isn’t the case for millions of Brits though. It found just three in ten men and two in ten women are confident they could financially handle a major unexpected expense. Money worries emphasised this lack of confidence too; 76% of women and 72% of men admitted they worry about money.
Keep track of your spending
It’s easy to lose track of where our money is going. But it’s a sure-fire way to miss opportunities that could save you money.
Keeping tabs on a household budget can highlight where direct debits, such as utility bills or phone contracts, have crept up. A regular review will help you find the best deals and reduce essential living costs. It can also highlight where discretionary spending is adding up. Small expenses often go unnoticed when you look at the bigger picture, but they can have an impact. If you’re worried about money because you feel you’re not saving enough, for instance, cutting back here can help.
Reduce high-interest debt
If you have existing high-interest debt, such as credit cards or loans, you should prioritise repaying these.
Interest rates on savings are at a historic low. As a result, money in your savings accounts is likely to be offering significantly less interest than the amount you’re paying to service the debt. Reducing debt first can mean your outgoings are eventually reduced, allowing you to divert more to savings in the future.
Not only does it make financial sense to pay off debt, but it can be a weight off your mind. People often find their financial wellbeing and their peace of mind improves when they are debt-free.
Build up a rainy-day fund
Having a financial safety net to fall back on can deliver more peace of mind too. It’s recommended that you keep three to six months’ expenses in an easy access savings account. This gives you a financial buffer should something happen.
It can seem like a large target if you’re starting from scratch. But you should make it part of your budget, transferring a set amount each month. As it gradually grows, you’ll hopefully start to feel more confident in your financial security.
Consider your long-term financial plan
Often when we worry about money, it’s the short term we focus on. However, looking ahead to the medium and long term is also important and can be a source of anxiety. Once you feel more confident in your current finances, turning your attention to goals further down the line is the next step.
This may include adding more to your pension, building up an investment portfolio or creating a nest egg for children or grandchildren. Knowing you’ve taken action to meet long-term aspirations can provide a confidence boost and help you feel more in control of your finances.