Struggling With Your Finances? Follow These 10 Steps For Successful Money Management

If you are struggling with your finances, don’t feel like there is nothing you can do about it. There are simple things you can do to get back on track, and you can start immediately. 

Here are ten steps to follow on the pathway to better money management.

Successful money management step 1. Clear Your Debts

Whatever your financial plans, having a large debt or numerous smaller ones will make it challenging to enjoy life. Paying interest on your loans will mean you have less money available for everyday expenses, luxuries, and saving for your future.

When you make a plan for clearing your debts, prioritise those with the highest interest. The more interest you are paying, the less money you’ll have to pay the capital amount on your loans. Therefore, pay off the high-interest loans first. 

Remember, you’ll not get your debts cleared immediately. So, don’t become disheartened, and persevere, as the benefits of becoming debt-free are considerable. 

Step 2. Look For Better Deals

An excellent way to free up some cash is to shop around for better deals. Doing this regularly will give you more money to pay off your debts quicker. 

Keep an eye on your direct debits and other regular payments. If you notice them going up, you should consider looking around for cheaper alternatives. 

An excellent place to find better deals is by using comparison websites. These will give you plenty of options for discounts on utilities, mobile phones, broadband, and other services. 

Step 3. Set a Budget

One of the most effective steps you can take towards better money management is to set a budget. The challenge with budgeting is maintaining the willpower to stick to it, especially when credit is easy to come by. 

Sticking to your budget will prevent you from falling into further debt, so the rewards are considerable. To help ensure you don’t overspend, set up your regular payments, such as utility bills, to leave your account at the start of the month. Doing so will give you a clear indication of what you’ve got left for other expenses. If you struggle with managing a budget, there are plenty of apps available that can help. 

Successful money management step 4. Organise Your Finances

Getting your finances organised will help you manage your money better. Having all your money in a single account may be the way it arrives in your bank, but there’s a more effective way to organise your finances. 

Separate your finances into different accounts and allocate a proportion of your money into each. For instance, you could have one account for bills, one for day-to-day expenses, and another for saving. It is straightforward to set these accounts up using an online banking app, and doing it will help keep your budgeting on track. 

Step 5. Check Your Online Spending 

If you are not careful, spending you make online services such as broadband, video streaming, and TV packages can rocket overnight. The reason, generally, is that when you originally signed up, you were on an introductory offer.

Keep an eye on when services renew and look for a better deal. Also, consider whether you are getting total value from the services you’ve bought. If you aren’t, you should think about cancelling or downgrading them. 

Step 6. Invest As Well As Spend

So far, we’ve concentrated on cutting back on your spending. This step is about using some of your money for investing in your future. 

We understand it can often seem that your money has left your account almost as soon as it arrives. In this situation, investing may be the last thing on your mind, as you’ll have spent or allocated your money on other things. However, an excellent way to ensure you can invest something is to set up a payment that goes to an investment account at the start of the month. 

Of course, not all investments are the same. Some are better for the short-term, others long, and some come with more risk or return than others. An efficient investment vehicle for the short to medium term is a Cash ISA. These allow you to save up to £20,000 a year without paying tax on your returns. However, before you put your money into an ISA, you should consider the access you need to those funds, as they may be locked into the investment for a set period. 

For long-term savings, you may want to harness the power of pension investment. Contributions into your pension pot are eligible for tax relief up to a maximum of £40,000 or the value of your annual salary, whichever is the lower amount. Pensions are long-term investments, and you cannot access your funds until at least age fifty-five. This long-term lock-in allows your pension fund to grow considerably due to compound interest growth.

Successful money management step 7. Keep Checking Your Pension 

Saving into a pension is a fantastic start in preparing for your retirement. However, it is not sufficient to merely pay money into your pension and expect it to grow as you planned. Even though it is a long-term investment, your pension has a limited time to grow, so you need to maximise this growth. In addition, high management charges or poor performance can eat into your profits, diminishing your funds for retirement. Regularly checking your pension allows you to take action early to address any negative aspects affecting your fund. When thinking about your pension, speak to a regulated financial adviser such as Portafina or, view the information at The Money Advice Service.

Step 8. Don’t Refuse Free Money

This step might seem like a no-brainer, but some people fall into the trap of doing so. With a workplace pension, your employer makes contributions equivalent to 3% of your gross salary. You would not have these contributions if you were to opt-out of a workplace pension, so it is effectively free money. Similarly, personal contributions to workplace pensions are eligible for tax relief. Therefore, money that would typically have gone to the government goes into your pension fund. Again, this is free money, so don’t turn it down by opting out of your pension scheme.

Step 9. Be a Bit More Financially Selfish 

Brits tend to be generous when it comes to supporting their family financially. Research into this subject has revealed that around half of 18-45-year-olds have had their savings boosted by parents. Moreover, around half of British parents have contributed up to £5,000, which they don’t expect to be returned. However, you should not do anything that will risk the money you have saved when it comes to your retirement. Ultimately, doing so will diminish your retirement lifestyle and could prevent you from supporting your family later on.

Successful money management step 10. Plan For the Unexpected 

Even making as many plans as possible for your retirement, you can be sure that you’ll encounter something unexpected along the way. For example, car repairs, a broken boiler, or other emergency spending can make a severe dent in your retirement funds. Having an emergency fund to cover such events is a great way to plan for the unexpected. Ideally, your emergency fund should be sufficient to cover 3-6 months’ worth of living expenses.

Conclusion

If you find yourself struggling with your finances, there is no need to despair. Hopefully, these ten steps to successful money management will get you back on track to financial contentment.