If you’re not concerned about your financial health, you probably should be. In fact, according to research firm Toluna, 65% of Britons are now seriously concerned about their financial security as the pandemic continues to impact the economy.
While some of the changes you make to your finances may take a while to show results, there are things you can do today to start this journey. In fact, some of the financial decisions you make today will immediately start to improve your financial health.
1. Monitor your credit report and litigation issues
Nothing says “unhealthy finances” like a bad credit report. It affects your ability to borrow money, buy a house, and get better interest rates on your loans. Repairing your credit report can be difficult, but you should start with check your credit score at the three major UK credit reference agencies: Equifax, Experian and TransUnion.
If you notice any inaccuracies or errors, debts that should have been marked as paid but not paid off, or suspicious activity that could indicate identity theft, clear them as soon as possible.
Nothing ruins your credit history faster than late or missed payments, so be sure to track your debts to see improvements.
2. Make a plan to pay off your debt
There are good and bad debt. A mortgage is positive debt that will increase your equity, while high interest credit card debt will only hurt you.
But whatever type of debt you have, you should calculate it and see what you owe and what your minimum payments are. Once you know the total amount, you can then create a plan to pay it off.
This could mean focusing on one debt at a time while making minimum payments on all the others. This is known as the debt snowball method. Or you can just try to find ways to spend more money on debt repayment by reducing other expenses.
3. Make changes to your daily spending habits
Much of your financial health depends on your ability to spend money conscientiously. No matter how much you earn, if you spend it all, you will never accumulate wealth.
To help you understand where your money is going, first download a budgeting app. Then take a very close look at your expenses and determine which are wants and which are needs.
For example, some of your clothing and personal care expenses may be considered a need (like replacing old winter boots), but a large part is probably a need. Learn how to reduce or eliminate the things that drain your bank account to see rapid improvement in your financial health.
4. Start investing now
You don’t have to wait until you’re in a better financial position to start investing. With so many stock trading apps now available, anyone can learn the basics of investing and start digging their toes into the market.
Feeling overwhelmed? A financial advisor can help you navigate the investment options to find the ones that are best for you. Investing comes in many forms – low or high risk, long or short – and you can start with as little as £ 50-100 per month.
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