The best financial advice that I follow and live by is a basic list, composed of eight key points. I have learned these little advice nuggets from my family, friends, and many of the other personal finance bloggers that are online. There are many other points that I follow, do not get me wrong, but these are the top finance tips that I felt worthwhile sharing.
1. Pay yourself first
Save 10% of your paycheque and pay yourself. It is always important to save money for an emergency. When I first started budgeting, I took 10% of my pay and put it into a savings account. While doing this, I was able to build an emergency fund which was enough to cover my necessary bills for 3 months. After I had built my emergency fund, I started to take that 10% and put it towards my smallest bill with the highest interest rate. For me at the time, it was my credit card bill.
You can use an online budgeting calculator to figure out how much you can put aside, like the one from Money Advice Service here.
2. Set realistic goals
Set realistic goals and make them achievable, it helps to add a reward at the end. Not only that, if it is realistic, you are more likely to stay on track and not give up. The reward can be something as simple as a takeaway or even going to the cinema. The month after I saved my goal for my emergency fund, my partner and I ordered the largest Indian takeaway we have ever before (with a 25% discount code, of course).
Next goal for me is a bit bigger than my others – Pay off my student loan!
3. Don’t sweat the little things
Most people try to scrape pennies from the smaller budget items. However, I find it easier and more efficient to focus on the larger items, like the shopping bill as a whole. I tend to cut it by shopping the sales (you must have an eye for those reduced yellow labels) and just cooking with what I have rather than going to the shop to buy one item. As I am sure you are fully aware, you never buy just one thing – Supermarkets are very sneaky with how they lay out their stores.
4. Budgeting not working? Try a spending plan
Starting a budget can be a struggle for many. Some people find that starting a spending plan before writing a budget puts them in the right state of mind and helps them mentally prepare. Find out how to create a spending plan here.
If a spending plan still doesn’t work, try using automated help with a budgeting app.
5. Find something to do in your spare time
Most budgets start with cutting things like entertainment. This leaves extra time where being bored might cause you to spend money. Instead, find a free hobby, or even volunteer at a shelter or even a church event.
I find blogging a great way to distract myself from spending. It might not be free, but it is super cheap where it only costs about £4 a month to host your site on a server.
6. Never choose a job for its money
Having a job that you hate can cause a big problem for you financially. You will be less inclined to work hard which leads to fewer raises, and no promotions. Choose a job you love, and these things will come naturally.
Whenever I have received a pay raise, I use the extra amount to increase the money I can put towards paying off my student loan and adding to my savings. The trick is to pretend like the raise never happened, so I don’t increase my expenditures.
Let’s say you make £25,000 and get a 2% increase at your annual review. This gives you an extra £500 a year to put towards your debt. Those extra payments can cause a drastic decrease in your interest rates, making you pay less in the long run.
7. The more you own, the more things own you
Owning a lot of extra gadgets can surely cost you. The more you own the more you pay for upkeep. If you are truly serious about being financially stable and struggling to find where to save money look at your bills and cut out the unnecessary ones.
Do you really need 3 TV’s in the house, or can you survive with one? Do you need a Sky TV package, or can you live with a single streaming service, like Netflix? Better yet, do away with both and use that time to make money on the side, such as taking paid online surveys.
8. Spend more ONCE on quality, instead of cheap multiple times
There are many sayings for this: “Buy nice or, buy twice”, “Quality over quantity”, or “Buy cheap, buy twice”. There will be items in life that you will always need, so it makes sense to save as much money on them as you can.
A simple way to do this is to buy the best quality products for those necessities (read: best quality, not most expensive). Do not think because it is cheap it is a good deal. You could be buying multiple items in the long run, whereas if you buy one quality item it is likely to last a long time. When things go on sale is usually when I try to buy my quality items.
I hope you have learned a point or two from this that you apply to your own life to give you a sense of financial wellbeing!
James Banerjee is an Account Director who graduated from the University of Kent in 2014. He works in SEO on clients such as HSBC UK and Nestle and he has a keen interest in personal finances and money-saving advice.