Planning a budget, taking into account all of your income and outgoing expenses, can be one of the first steps to getting control of your finances.
Managing your money: 9 steps to financial wellbeing
Financial fitness, or wellbeing, is about feeling comfortable and in control of your financial position. It means having the knowledge and confidence to make the most of your money.
Plan your spending
Keep track of your spending
Avoid finance facilities for essential expenses
Find the best deals
Choose the right financial products
Prepare for the unexpected
Plan for the future
Priorities Consumer Debts
Prioritising your debts may help you feel more in control of your money. You could start by drawing up a budget that looks at your spending and assesses how much you have available to pay each month. If you can, look at any areas where you could cut back to free up more money.
Once you know how much you have available for payments, you may want to make a plan using one of the methods below.
Method 1 – Pay off the most expensive debt first
Typically, a cost-effective option is to pay the debt with the highest profit rate first, as it’s charging you the most to obtain finance. List out your debts in order of profit rate, going from highest to lowest. Prioritise paying the debt the top, working your way down the list over time.
Method 2 – Pay off the smallest debt first
While it may not be the most cost-effective method, some people prefer to pay off their smallest debts first so they can reduce the number of debts they have to think about. If you feel this may suit you, list out all your debts with the smallest one at the top and the largest one at the bottom. Prioritise paying the debt at the top, working your way down the list over time.
Method 3 – Debt consolidation
If you’re finding juggling multiple finance facilities too stressful, a debt consolidation finance can be a way to simplify your repayments and get back on track. A debt consolidation facility gives you the following benefits:
- A single profit rate
- Recurring payments
- A clear finance term
By effectively transferring all your debts to one bank, you can simply make a single monthly payment instead of worrying about several facilities. Debt consolidation does not only help by making a single payment, it also helps effectively to reduce the overall profit amount paid. You have two possibilities here. Ring the bank with which you have a good track record – typically your salary transfer account. Alternatively, discuss debt consolidation with the bank where you have the largest outstanding. It’s worth remembering that you should only agree on a payment you can afford.
Reach out for help
If you’re struggling to make ends meet it can be a good idea to speak with friends and family, as well as trained professionals about your situation.
It may feel difficult but starting the conversation with someone you trust may help relieve some of the pressures you may be feeling. Being open about your finances with a close confidante garners emotional support, helps to reduce temptations, and also promotes accountability, helping you stay on track.
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