Developing healthy financial habits is important for many reasons, especially your mental health. Money can be a big source of stress, which is why it’s important to get your finances in good shape.
Whatever your present financial situation, it’s never too late to start getting your finances in order. Doing so will clear your mind and make your finances easier to manage. Secure your financial future by following these ten steps for better financial health.
10 tips for better health by getting your finances in order
1. Face up to your financial situation
A crucial first step to getting your finances in order is to face up to your financial situation. This means figuring out exactly what all of your outgoings are, what your income is and how much debt you have. Doing this can be one of the most difficult elements for anyone to face up to, but it gives a clearer picture of what your financial situation is and can help you identify areas for change.
2. Set goals for yourself
What are your financial goals? Do you want to save for something significant, even out your spending or pay off your debts? Goal setting is important and will help give you a direction for your finances. Having a reachable target in mind will help you to plan your finances and give you something to work towards, making it easier to develop some new, healthier money-managing habits.
3. Set yourself a budget
Anyone, regardless of their income or financial situation can benefit from creating a budget. A budget will help you manage your finances month-by-month, easing stress and helping you to ensure that all of your essentials are paid for. Budgets are also great for ensuring that you use anything left over in a sensible way. Taking a close look at your outgoings can help you establish areas where you could make cuts, such as unused gym memberships, large TV packages and overspending on your grocery shop.
4. Put direct debits in place
It’s surprising how many people don’t have direct debits set up to cover their monthly outgoings. Putting direct debits in place is the easiest way to make sure your payments are made on time, helping you to avoid late payment fees, interest rate increases and damage to your credit score. Sometimes providers will make you pay a transaction fee for making payments over the phone, so check to see whether a direct debit is the best course of action for you instead. Make a note of any dates your payments are due in your diary or on your phone to ensure there’s enough money in your accounts to cover them. It’s worth scheduling them as close to your pay day as possible so that you don’t have to worry about your spending for the rest of the month.
5. Consolidate your debts
Tackling your debts can help you get a grip on your finances, as well as improve your credit score. One of the easiest ways to reduce your overall debt is to consolidate it. Deciding if you should consolidate your debts depends on different factors, so you’ll need to think carefully before you make the decision. If you have a lot of high interest cards or you are struggling to manage multiple payments, consolidating your debts to one loan or credit card could save you a lot of money in interest fees. This could also help you pay your debts back quicker, provided you pay them off before your interest rate offers come to an end.
6. Focus on making savings
Even if you’re not saving for anything in particular, it’s good to have some savings behind you for a rainy day – you never know when you might need them. When you’re new to saving, you should aim to put away around 10% of your salary, which you can increase as you prepare for bigger plans in the future. Your savings will give you a cushion so that if you need repairs on your car, or you’re left out of work – you’ve got something to fall back on. This will be a great weight off your mind if you’re always worrying about money.
7. Take advantage of reward schemes
Ever wish you could make your money stretch further? Reward schemes make it easy for you to save money by giving you back a percentage of your online purchases – helping you make some money off your purchases. ESMI’s rewards scheme allows you and four other users to benefit from cashback and discount schemes from popular retailers such as M&S, Sainsburys, Topshop and House of Fraser, just for being ESMI customers. With new and exciting rewards being added all the time, you can easily start making cashback savings. Reward schemes make an excellent savings pot for Christmas, holidays and special treats – a perfect little bonus for you and your family.
8. Cut your energy usage
Cutting down on your bills is a simple way to reduce your monthly outgoings. Knowing that you’re proactively reducing your spend will reduce your money worries, as well as giving you peace of mind that you’re doing your part to reduce waste. There are some simple ways to cut down on your energy use, such as using a smart meter or turning off your appliances at the mains – saving you a significant amount over the course of a year.
9. Invest in insurance
Insurance is another way you can safeguard your finances, while ensuring peace of mind that you and your family would be looked after if something were to happen. ESMI offers various types of insurance policies such as life insurance, life and critical illness insurance as well as sick pay insurance – covering you against many of life’s possibilities. The future can be unpredictable, but if you’re a worrier, it can be worth investing in insurance so you can sleep easy, which has many benefits for your mental health.
10. Get frugal
When it comes to your spending habits, an attitude shift could be what you need to make you less stressed about money. Adopting simple habits such as sleeping on a purchase decision can help you think more sensibly about your finances and whether or not you need to make those ad-hoc purchases. Another habit you should adopt to help you spend less money is to carry cash with you instead of relying on your debit card – withdraw what you need at the beginning of the week and then leave your card at home. This will stop the anxiety of not knowing what your bank balance is when you go to check it, and could leave you with more money left at the end of the month.
Good financial health is an important part of your overall health, so make sure that you take steps towards getting your finances in order to give you one less thing to worry about.