Back in January 2020, much before COVID-19 shot into the limelight in the UK, a survey conducted by money.co.uk published a horrifying data set that shows the egregious state of household debt in the UK.
The survey revealed that nearly 5 million people owed a little over £10k in loans and credits, with card debts topping the list. With Coronavirus taking the centre stage thereafter, it’s a no brainer that the numbers have only headed further north.
At this moment, we have something to take in from stock market wizards. Legendary stock traders always become greedy when others become fearful and fearful as others get greedy.
If the statement above rings a bell in your mind, then this can be the best time for you to reshape your finances and get back on track with the ultimate list of top-7 tips you need right now.
The Ultimate Tips You Need to Get Your Finances Back on Track
First thing first, to bring your finances back on track, you need to have the following three traits:
- Courage – To take bold steps, even when the steps seem too boring and time-consuming at first glance.
- Patience – To wait for more time than your brains can endure. You must acknowledge that it takes a minute to spoil something, but years to rebuild it.
- Zeal – To identify the trends that are driving the field of financial management.
Now that you know the traits that are needed to make the best out of the following points let’s head straight to understanding what you need to do to shape up your finances.
1. Settle Your Credit Card Dues
To improve your credit score, you need to settle off your credit card debts as early as possible.
However, under the current circumstances, it might be difficult for you to repay the entire due in full. You may talk to your card provider and apply for an interest-free debt waiver for a few months.
Generally, card providers enter into various types of agreements with the cardholder to get back their dues.
You may apply for a lump sum payment agreement if you want to settle your debt with a one-time payment. If, however, you wish to reduce your interest rate or monthly payment, opt for a workout agreement.
A credit card with bad credit can be the best option if you want to fix your credit profile without getting into time-consuming negotiations.
2. Jot Down and Evaluate Your Expenses
Most of us overlook the need for preparing an expenditure list that lays down details of all our spendings.
Make this a habit if you want to reclaim authority over the money that flows out from your wallet. As you note down the expenses, identify which expenses are necessary and which are discretionary.
The next step is to filter out discretionary spending from the necessary ones and take steps to reduce expenses that do not add much value to the overall scheme of money management.
3. Stay As Away As You Can From Buy Now Pay Later Schemes
Buy now pay later schemes have been a rage with young professionals right from the time it was launched in the UK.
While on paper these schemes look lucrative, it can cause irreparable damage to your credit profile if you miss out on payments. And once your credit score gets negatively impacted, it can take months, or even years, to get back to its original place.
If you have already entered into a buy now pay later agreement, check its terms right away and try to clear off the dues as early as is possible.
4. Open an Individual Savings Account
The ISA allowance can provide you with tax-free earnings of up to £20,000 in the 2020-2021 financial year. The best part of the ISA allowance is that it allows accounts in the name of children as well, who can save up to £9,000 in a financial year.
ISAs are of two types – cash ISAs and stocks ISAs. You may put your money in only one type of ISA at one time.
ISAs are flexible. You may put in and take out the money as many times as you wish to, provided you do not exceed the limit set at the start of a financial year.
5. Avail Services Digitally
If you have been too reluctant to move to the digital platform for keeping a tab on your finances, then this is the right time to shed your inhibitions, be a little more courageous, and embrace the new normal.
Create digital copies of all your certificates and avail digital services for your existing investments.
Other than simplifying money management, digital platforms can also give you a few cashback and welcome bonuses you can never get otherwise.
6. Create a Corpus That Can Help You to Tackle an Emergency
The ongoing pandemic has given us a hint of how bad disruptions can be. Be it job loss, loss of income, or loss of life, when times are bad, nothing can be positive.
This can be the best time for you to create an emergency fund that will have enough money in the account to sustain yourself and your family for at least six months, in case things get really bad.
The best way to avail high returns from your emergency fund is by putting it in a liquid scheme that will give you market-beating returns and the flexibility to withdraw whenever you need the sum. While six months is the bare minimum, you may increase it to a period that suits your horizon.
7. Apply For a No-Interest Loan
People often decide to break their term deposits prematurely or opt for costly credit schemes to fulfil their unfulfilled dreams.
With technology by your side, you do not need to run after costly loan options any more, as many modern lenders offer no-interest no-frill loans at the click of a mouse.
Loan UK can be the place for you if you want to give shape to your aspirations without touching your savings. An interest-free loan can also boost your credit score. Use it judiciously, and you will never have to worry about your finances anymore.
Taking control of your finances can be easy if you have the right approach. The journey to financial freedom begins with fiscal prudence. Settle off your debts, invest in quality financial instruments, and fulfil your dreams with a loan.
When you have a robust financial plan that can withstand the test of time, you can lead a life of unparalleled comfort and peace.