Financial stability is something for which we all strive. The ability to relax into our work, safe in the knowledge that we can afford to keep our homes, is one that not many would take for granted today. This is particularly true in a country where living costs are higher than ever.
But financial stability is not all too easily won – at least, without some guiding advice to help you navigate the financial products available to you, and to help you steer clear of bad spending habits. What follow are a few simple yet essential tips to finding financial comfort, and ensuring stability in the long term.
The importance of keeping track
Without data, you are effectively blind to your financial situation. This is why keeping tracking of your personal finances is such an important initial task, and something you should be striving to keep on top of at all times. Basic information, like how much your household brings in in total each month, and how much essential costs like housing and energy detract from that income, allows you to make informed decisions regarding your budget – speaking of which…
Tracking more nuanced expenditures over the course of a month allows you to think carefully about your money – specifically, how much of it you are truly able to spend safely. Using past months as a guide for future months, you can set reasonable maximum spend amounts for yourself.
Spending less than you make
The ultimate goal here is to ensure that the complete total amount leaving your household each month is lower than the complete total amount of income. If spending exceeds earning, and you aren’t in a position to soak up the difference, it is extremely easy to fall into the trap of relying on credit cards, overdrafts or loans – otherwise known as debt.
Keeping an emergency fund
Avoiding this possibility should be a priority, particularly in the early days of your financial literacy journey. As such, it would behove you to create a savings pot for emergency expenses; this would be a few months’ household income in size, ideally, enabling you to swallow unprecedented or emergency costs without jeopardising your wider financial journey.
Choosing expenditure wisely
It isn’t just how many extraneous things you might be buying that negatively impacts your financial situation; it is also the price you pay for certain expenses that can affect your stability. Energy bills have been a major source of worry for households, but with prices coming down it will soon be possible to compare tariffs and switch suppliers – which can help save hundreds per year in costs. This approach, across your spending, can help save thousands.