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More than 16 million UK residents have savings less than £100^[1], and half of the people aged 25 to 34 years old^[2] are already worrying about their financial conditions. Money has always been a stressful topic for many people, and any form of stress is not healthy for your physical and psychological health.

If you think you’re one of those who worry about their money situation, here’s what you can do—avoid worrying and start finding solutions for your future problems. You can begin by following some tips we have for you.

Tip #1: Understand your expenses

Taking steps towards solving your financial problems can be overwhelming, but you can start with this simple step. What you need is to take time to identify where your money is going. Determine all the expenses you have for a month. Once you understand where you tend to spend your money, it will be easier for you to identify which areas you can limit, which expenses you should prioritise, and what are the opportunities to save more money. 

When you have that awareness, it can help you in making decisions about a purchase. Remember also to include all your annual payments and break them down into months, so it will be easier for you to gauge how much money you need in a month. 

Tip #2: Pay your debts

The next step you can do is to pay all your debts. Before thinking of saving, you should focus on eliminating all your debts. Huge debts can be a trap. Apart from higher interest rates every year, you’re also putting your credit score in a bad light. 

As soon as you pay off your debts, your credit score will improve. It can also be a good training ground in disciplining yourself. To make the process less stressful, you can break down the five-year repayment plan into 60 months and track your progress accordingly. You can also enrol your account in automatic payments, so you’ll ensure that your debts get paid on schedule. 

Tip #3: Create an emergency fund

There will always be an emergency expense in life. Whether it’s an unforeseen sink repair or you lost your job, you’ll need cash. Allot a portion of your monthly salary to your rainy day fund, and you’ll feel more prepared for the unexpected situation. Aim for the value of at least three to six months of your monthly expense, and you’ll surely be at peace and ready for whatever life throws at you. 

Tip #4: Protect yourself by buying insurance

As previously mentioned, life is unpredictable. Anything can happen to you, to your house, to your car, and your work. Make sure that you invest in protecting yourself in case worse things happen to you in any of these life aspects. Know which among these you must prioritise and work on them one by one so that you don’t get overwhelmed.

You may have a life and income protection through your employer, and the UK provides state benefits, but you should not rely on them alone. For example, if you get sick, you are only able to receive £95.85 per week for a maximum of 28 weeks^[3] from the government. That cannot save you from the other expenses of living. When you can no longer work due to disability or health concerns, you would get £151.40 per week for your independence payments up until the state pension age. It can help, but it may not be enough to support you and your family until you’re 65. 

It’s best to discuss this with a financial adviser to figure out the best type of protection for you.

Tip #5: Make room for changes

As you grow older, you’ll experience more changes in your life. You’ll soon move into a bigger house, get married, start a family, and more. You might plan for these things, but expect more changes you might not have thought about to come. Your rainy day savings can help you answer these unplanned life events, so make sure you’re able to sustain it. Plan well for the life events you’re expecting but also prepare for the unforeseen circumstances. 

Conclusion

Before you get overwhelmed with financial problems you’ll experience in life, it’s essential to remind yourself to take one step at a time. You can start by dealing with each tip provided in this article. What’s important is you know the significance of financial management early. That way, you’ll be emotionally prepared to face them.

If you need assistance in the financial planning process in Cardiff, Harry Robinson Wealth Management is here for you. We can talk from starting an individual savings account, setting investment, and building portfolios to mortgages, lending, and more. Contact us today to learn how we can help you.

References

1. BBC News. https://www.bbc.com/news/business-37504449. Accessed on July 29, 2020.

2. Equifax. https://www.equifax.co.uk/efx_pdf/Equifax_Debt_and_mental_health_Final.pdf. Accessed on July 29, 2020.

3. GOV.UK. https://www.gov.uk/statutory-sick-pay. Accessed on July 31, 2020.

*Will writing and Powers of Attorney involve the referral to a service that is separate and distinct to those offered by St. James's Place and along with Trusts are not regulated by the Financial Conduct Authority.