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Looking after your personal finances.
What are my personal finances?
Anything you do that involves money would be considered to be your personal finances and this can include but is not limited to the use of credit cards, bank accounts, personal loans ad home mortgages. Any purchase or any money you spend is also a part of your personal finances. You need to make sure you are effectively managing your personal finances yourself because nobody else will do this for you unless you have the unusual and unnecessary advantage of a personal accountant.
Budget and homework.
The very first thing you do in your bid to managing your personal finances is to draw up a budget. It doesn't need to be in a red box and it doesn't need to be to the nearest penny, in fact it is always better to round your expenditure up and your income down just to be on the safe side. In your budget you should include details of all incoming money and all expenditures as well as more precise details of any credit you have.
This should include the amount you borrowed, when you borrowed it, when it's due to be paid off, repayment date and who it is with. You should include your personal living expenses as they are now including patrol, weekend beer money, morning coffee money and everything. Later on you may be able to use this information to save a few pounds.
From here you should be able to work out exactly how much money you have left over after making all your payments. Hopefully this will be a positive amount, but if it's negative then you desperately need to firstly check there are no mistakes and secondly see if there are any ways you can save money through the expenditure section. Is there a cheaper coffee shop, or could you spend less at weekends? Consider sharing your car journeys to and from work with somebody else essentially cutting down on half of your monthly petrol costs, and we all know that the price of petrol is rising astronomically high.
Managing debt.
If you can afford to you are always better off paying your monthly credit card bills in full instead of only paying the minimum. Don't miss paying another bill to do this though, but paying the monthly minimum will greatly increase the amount you have to pay back in the long run and may see you paying back a £5,000 credit card balance over the space of nearly ten years.
Consider a balance transfer from one credit card to another in order to minimize the monthly repayments for a short while but try to pay off the balance once this period is over. If you have a mortgage see if there are more favourable mortgage terms out there for you but make sure you fully do your homework.
Insurance.
Having adequate insurance is a very important part of many people's lives and in recent surveys less than 1 in 4 partners found that their spouse had enough life insurance. You may think it is too expensive but if you are laid off work for an extended period of time due to ill health then you will be glad you paid it. If you die without having life insurance your family will be left with bills and the mortgage to pay but without the financial support you offered while you were alive.
Looking after your personal finances is all about getting the right balance and if you start well then you shouldn't come across too many difficulties and still be able to afford the odd luxury. Effective debt management doesn't need to be difficult, and often the hardest part is sitting down and actually starting but this first step is vital in yoru road to financial recovery.
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