Manage your money well
Make sure you’re in charge of your money, or your money could end up running you.
Managing your money is an essential life skill, it really isn’t so difficult once you know what you’re doing. The only person responsible for your financial health is you once you’ve left home, so it’s good to know the essentials.
Debts
The most important thing is avoiding unmanageable or crippling debts. That means steering clear of credit cards, store cards, or loans that you don’t really need. By borrowing in this way you will be charged very high interest and your debt could easily spiral out of control.
Before you start saving, spending, or investing, pay off those debts. You will lose more money on high interest payments than you’re ever likely to make with most savings and investments. You’ll be better off in the long run if you work harder at ditching the debt.
Emergency money
Once your debits are paid off, start saving for a rainy day. You really never know when you’re going to have an emergency or need a cash cushion. An unexpected pregnancy, a job loss, essential household repairs, or a new interview suit can be made less of a worry by keeping some cash to one side. Keep it in an instant or easy access account, and check from time to time that you’re getting a competitive rate of interest on it. Check moneyfacts.co.uk and moneysupermarket.com for the best deals. Ideally, if you’re working, have enough money saved to cover three to six months of basic living costs. Just save whatever you can if that’s unrealistic, even if it’s only a pound here and there. Anyone living on benefits, who is on a very tight budget should concentrate on breaking even, and avoiding debt wherever possible.
Basic savings and investments
Think about some of the less risky ways to save and invest once the debts are paid off and you have some emergency money saved. Although you will be hard pressed to find a savings account paying high interest these days, better rates offered on accounts where access to your money is restricted. Boost your savings by taking out a Cash ISA. They work like a savings account, but you deposits won’t be taxed. And don’t forget pensions. It’s never too early to start saving for your retirement and Stakeholder Pensions are a good option if you don’t have a pension arrangement at work. www.thepensionsregulator.gov.uk/stakeholderpensions/
Taking more of a risk
This is only for people who have a stable financial foundation first! With riskier investments, you might make more money, but you also run the risk of losing the lot. This includes unit trusts, investment trusts and shares in single companies. Don’t be greedy and get sucked in by offers of high returns, always read around the subject and do your own research before committing to a purchase.
If you’re still not sure what you should be spending your money on and how much you have left at the end of the month, try out the FSA’s budget calculator.
To avoid getting into debt in the first place follow these simple rules:
2010-09-30 00:30:33
This is gonna come in helpful this month, as I am applying for student finance and working out my expendetures throughout university. Thanks for this guide. :)
2010-12-10 20:49:45
I'm pretty good with my money, until i find something i wanna buy :p nice article though :)
2011-01-25 21:43:45
I love money, I'd love to have much much more of it so that I could love it more, but alas that is a big disapointment in my life that I have very little of it x
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