It’s easy to ignore your money. That statement works both if you’re doing well, and don’t panic about reaching the end of the month, and if you’re struggling and can’t even think about money without getting an ulcer.
Money is a huge part of our lives. It can in part dictate the choices we can make both now and in the future. Be aware of your money and these 5 things that you’re doing with it.
1. How much you earn
Know how much you earn. Even if you don’t struggle to get to the end of the month you should always know exactly what’s coming into your account and when.
This can be harder if you’re freelance, but depending on how long you’ve been freelancing, go with a 3 or 4 month average.
Knowledge is power and all that. By knowing your take home you are in a better, more informed, position to make budget and spending choices.
2. How much you spend
This goes for everything. Firstly, calculate all your necessary outgoings. This includes bills, rent, tax, car, debt payments; EVERYTHING that needs to go out of your bank that month, no excuses.
Next, keep a tally of exactly what you spend on a daily basis; coffees, clothes, transport, drinks with work, takeout. Everything. In order to become more financially savvy you need to start with the basic knowledge of what’s actually in your bank account at any one time.
By always being aware of how much you’ve got in the bank you can curb your spending in areas that can feasibly be cut out, like your coffee habit, instead of running out of money and not paying the electric bill.
3. How much you owe
Debt sucks, and can be overwhelming (I know, I live in dread of my student loan statements). However, head in the sand isn’t the way forward. Tally up what you owe, and to whom. If possible try and consolidate your debt to make it easier to pay off.
Figure out exactly what you need to pay on a monthly basis, and for how long, in order to get yourself debt free. By making this plan you are actually doing two things; you’re tackling your debt in a logical and structured way, but you’re also taking positive mental health steps by taking control and not letting your debt overwhelm you.
Everything is easier with a plan, and if you feel you can’t do it yourself, then there are experts who will assist you in creating a Debt Management Plan.
4. How much you save
It’s easy to be the person who ‘thinks’ that they save money, but at the end of year realise that actually you’ve somehow managed to save not a penny. Between online savings accounts that you can dip in and out of, last minute holidays abroad, and unexpected bills, it’s easy to have no clue about what you’ve actually saved.
Here, fintech could be your way forward, as opposed to traditional banking systems. So many great and helpful apps have been developed to help you make savings in a system that works for you.
At Oval, we believe in helping you make small every day savings by rounding up purchases and sweeping the pennies into your oval wallet every time. We also think that by linking savings to social activity you could even save more. Set yourself a target; for every post you make on Facebook, save 50p or a £1 into your oval wallet. Oval can do that for you automatically.
5. How much you put into your pension
We did a little Q&A pensions piece to help you with some of the more confusing questions around pensions and why they’re so important.
Think of it this way; current you is helping future you.
When you’re old you lack earning power. This means that you can’t go out there and work an extra shift to pick up some cash, or just hold out the next few days until payday in order to go food shopping, because there IS no next payday.
It’s difficult to even conceive of how much you will even need to save in order to make sure you have enough by retirement age, so using a retirement calculator is a really useful way to give yourself a concrete sum to work towards when it comes to pension savings.
Most experts recommend putting between 10-15% of your monthly earnings towards your pension. This seems like a lot when you’re sectioning it off your salary now, but future you will thank you.