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Make Your Money Matter ^Featured

Thursday, 10 March 2011 14:24 Written by Dawn Leahey

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What’s a girl to do? Take a few tips from the money experts that’s what...

Step 1 – Spring clean your finances

Start by reviewing where the money goes every month. You can use bank statements and start a spending diary to help keep track of where you spend your money. Also, think about the items you’ll spend money on during the year, such as Christmas, birthdays, holidays, car and home insurance. Break down these annual spends into a monthly sum.

You should then have a month by month view of your spending. Compare this to your income and then you can see if you need to reduce your spending, save money on certain items and if you can put some away for a rainy day.

Step 2 – Reduce any debts

Make a list out all of your debts including loan amounts and interest rates. Think about if you could switch any credit card debts to a lower rate card (check the switching fee isn’t prohibitive) or if you could afford to over pay on your mortgage. Aiming to reduce the cost of your borrowing or speed up the rate at which you pay this off will likely save you money in the long run. Always make sure your mortgage payment is prioritised and if you have a problem paying it speak to your mortgage provider. If you have a debt problem, the Citizens Advice Bureau can help you to deal with this.

Step 3 – Start saving

If you’re new to saving having a goal in mind is hugely motivational! For example, your goal might be a holiday, Christmas next year or something longer term such as university fees or a house deposit. With your goal in mind you can set a savings target, a date by when you want to reach it and from there calculate a monthly amount to save to achieve your goal.

With your goal in mind you need to make sure you save it in an appropriate savings account. Children can save tax free, similarly adults can save up to £5100 tax free in a cash ISA. You should also consider if you need immediate access to your money or if you can go without it for a while. If you have a more substantial sum of savings then a discussion with an independent financial advisor might be worthwhile to seek out the best possible returns on your money.

Step 4 – Think about what your money needs to do in the future

It may be a long way off, but making sure you have provision for the future is extremely important. Will you have enough income when you retire, will your family be provided for when you are not around and would your wishes be followed? These are all complex matters, but extremely important to have sorted and organised. An independent financial advisor can help you to make plans.

Step 5 – Review, repeat, review.

This is an essential step to managing your spending, reducing your debts and saving for the future. Keep an eye on your savings accounts and credit cards and the rates they pay diarising when any bonuses or free interest rate periods end. Keep checking back to your spending diary and plans to ensure you’re on track, and be prepared to make adjustments where needed. These simple steps should help you and your family to make the most from your money in 2011.

Richard Barrett is Managing Director of Saffron Independent Financial Advisers Ltd your locally grown building society, www.saffronbs.co.uk/saffron-IFA 0845 600 7432