With the new financial year freshly underway, many people are taking the opportunity to get their financial ducks in a row. If you’re harbouring some bad habits where the bank balance is concerned, now might be the time to reassess and lay down some concrete steps towards building more constructive and sustainable practices. If you still have not been able to organize your finances, then consider getting help from WECU for Cash Management.

But where to start? Trying to tackle each of your spending habits individually can be overwhelming and result in no positive steps being made at all. Focus your energy on killing debt, saving a little more, and reducing spending. All of these are easier said than done, of course. If you want to rejuvenate your financial life, the key is to have a plan of attack. Here are some expert tips to give your action plan a boost for the financial year ahead. To can get more information at the link about how to improve your financial health.

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Tally Those Books

This might sound basic, but when you think about it, how are you going to get where you want to be if you don’t know where you’re at currently? Track your incoming and outgoings to assess what proportion of your income is going to various things, like housing, food, transport, education and entertainment. Download an app that tracks spending, or see if your online banking is able to provide you with this breakdown month by month. And when you’re tracking your spending, the devil is in the details: it’s those tiny spends, like a coffee here and there, that can add up and throw everything off balance, so make sure you’re tallying every cent. Get those credit card bills out and scrutinise them. If you are living beyond your means, it can be helpful to assign a necessity score to each item you’re buying on credit, with 1 being an unnecessary extravagance and 5 indicating an essential outlay. Before long you’ll be applying this scoring system before you spend, understanding the nature of your debt before you commit. Make sure you include all forms of equity in your initial assessment. Do you have savings banked? What do your financial investments amount to at this point in time? Do you have any assets and what are they worth? Understanding the extent of your safety-net is vital to knowing whether you’re prepared for the unexpected big-ticket expenses that could come your way. Whether it’s an unfortunate lay-off from work, an expensive hospital stay or the boiler’s gone on the blink, sometimes you need a stack of cash to get back to normal. It also pays to gather all your financial documents and forms, file all your important bills correctly, and set yourself up so your financial record keeping is on point going forward.

Zap That Debt

Getting into debt is totally understandable in this unpredictable world. However, if you can manage it, clear your outstanding debts to reduce what you’re paying on interest. But if you cannot, you’d be in the danger of being pursued by debt-reclamation companies like moorcroft. Those freed-up funds will go towards your safety net, insulating you against future ups and downs. A good rule of thumb is to aim to clear your highest-interest debts as a first priority, then progressively attack those lower interest loans. However, don’t focus solely on one debt at the expense of all the others, as this could result in interest fees racking up due to non-payment. Paying off debt effectively can feel like a juggling act. If you have too many balls in the air, those monthly bills can become unmanageable. Seeking professional assistance with debt management planning can help you regain your footing on the path to being debt-free, as well as giving you immense peace of mind.

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Outline Your Budget

When it comes time for budgeting, rather than starting with hard figures, it helps to work with a proportional breakdown of your income. First categorise your outgoings as either necessities or things you want, and then allocate a percentage of your income to each category. On the ‘wants’ side of things, try to understand whether your wants are non-negotiable wants, or wants you could do without. For example, a morning espresso from your favourite coffee shop before work is decidedly a ‘want’, but you may decide that it adds enough value to your life that you’re not prepared go to without this daily ritual. In that case, your morning coffee is non-negotiable, and you should budget for it as such, i.e. work out exactly what your morning coffee is costing you per month and per year, and factor that cost into your financial planning. When you’re allocating your income, bear in mind that everybody has different needs and wants, but a sensible rule to adhere to is no more than a third for things you want. You’d allocate half to two thirds to your needs, and whatever is left over for your savings account and possibly charitable giving, if helping others is important to you.

That All Important Safety Net

A common mantra of those in the know financially is that you should always try to have sufficient savings and assets such that you could live for at least a few months if your income suddenly dried up. Nobody likes to imagine being thrown into a crisis, but it’s important to recognise that emergencies do happen, and in your time of need, the last thing you need is more debt. Besides imagining unpleasant future eventualities, another pain point when it comes to building your emergency fund is that it can demand that you closely examine your expenses. If you’re not currently managing to save, look at your ‘want’ spends and ask yourself where you can reduce. This is where your non-negotiables come in: which ‘wants’ must stay and which can go? Selling things you don’t use anymore is another great way to line the nest egg. Even if used items don’t fetch a high price, small amounts here and there do add up if you’re putting them straight into savings rather than frittering them away. Sifting through the discarded items in your basement or loft, it can be easy to think that nobody would pay for your cast-off items, but remember, one man’s trash is another man’s treasure: list those gems on Gumtree and you may be surprised.

Tackling the finances is a bit like going on a diet: even if you know it’s good for you, it can be painful, and you might not see huge results right away. But if you’re up for the challenge this financial year, these tips will give you a head start.