1. Perform a financial review
This doesn’t have to be complicated, but is the crucial first step to understanding the health of your finances. Sit down and consider your income to expense ratio. Make sure you include any debts that need to be covered, including credit card and loan payments, as well as bills, membership fees and contracts.
A Money Health Check Tool like the one provided by The Money Advice Service can offer practical ways to improve your finances, whatever your situation.
2. Budget effectively
Once you know how much money you have available each month, the next step is to budget. It’s important to make sure that your expenses don’t exceed your income.
This exercise will help you see how your daily latte on the way to work adds up. Making small, practical changes to your daily outgoings can have just as big an effect on your financial situation as winning money on a scratch card.
3. Save for a rainy day
Cars break down, boilers stop working and roofs leak. Therefore, saving monthly is a must. Just don’t leave it to chance.
Set up a dedicated savings account so that you don’t end up mindlessly dipping into the emergency pot for non-urgent purchases. Set up a Direct Debit so that your savings are taken care of each month without you even having to think about it.
4. Invest is best
It’s a misconception that only the wealthy can afford to invest. In fact, building an investment portfolio is something that anyone can do, and the sooner you start the better.
Small amounts can be invested slowly over time. It’s certainly not a ‘get rich quick scheme’, but it does allow you to put money aside so that you can reap the rewards in the future. There are many ways you can invest; from stocks to real estate, but it’s important to find out what’s right for you and diversify as much as possible.
But, what should you invest in? You could invest in commodities which are physical assets including metals such as gold, silver and copper. There are several ways to invest in commodities. You can physically buy them directly, buy shares in commodity companies, or buy through a fund or investment trust. So, keep an eye on silver and gold prices and see if you can build a pot of treasure for the future.
Of course, you can also invest in more traditional stocks and shares. Choosing stocks should not be a decision made lightly though. Picking the best stocks to buy takes time and effort, and thorough research will be the key to your success. So, whether you’re tracking the Bank of America share price, or you have your heart set on owning a slice of Apple, be aware that you won’t make money overnight. Choose good stocks and then hold on to them for the long term.
5. Be open with your loved ones
Whether you’re considering taking out a loan, or investing in stocks and shares, it’s important that you talk it through with your family. Don’t keep financial secrets from your loved ones. This can not only result in poor financial decisions being made, but can also have a negative effect on relationships.
So, start 2019 as you mean to go on. Happy, healthy and in control of your finances.