Knowing how to manage your finances means that you can make your money go further. You can develop your funds in many ways, whether that’s by paying off any existing debt to free up cash flow or putting money to one side each month to develop a savings pot to fall back on if you find yourself in difficulty. You could also choose to apply for various forms of finance like a short-term loan to help with an unprecedented cost. Managing your money means you can get yourself into a better position financially. Read on for 7 key elements that can help to develop your finances.
1. Set financial goals
One of the best places to start when developing your finances is to set financial goals. This can work both in business and in your personal life and helps you to stay on track. Once you know what you want to achieve, and where you’d like to be financially, you can start managing your income in a way that will get you there. You can write down your goals so that you are more likely to stick to them, and so that it is easier to track your progress. If your goal is to save, make sure you set aside a little bit of your income each month, or if your goal is to pay off your debt, take the steps to automate this each month, so you don’t have to think about it. Whatever the goal, you can work towards achieving it by managing your money correctly.
2. Create a budget
Creating and sticking to a budget is a great way to see your finances develop. You can do this by working out your monthly income and subtracting any primary payments that you make each month like mortgage payments, reoccurring bills, savings, and debt repayments. The money you have leftover you should manage carefully, for example, could you add more money to your savings pot? Or if you don’t have much money left over, do you need to make cutbacks? Your budget allows you to track exactly where your money goes and enables you to make changes if necessary.
3. Create an emergency fund
It is so important that we all have money put to one side in case of an emergency – we can’t see what is around the corner, so preparing for every eventuality gives you the best chance of dealing with it without getting into financial difficulty. All you must do is put a little bit of money away each month – it doesn’t have to be a huge amount – and you will see it mount up over time. This is an essential step to take, and your finances will thank you for it.
4. Pay off debt
Paying off your debt can have a huge impact on your finances. Maybe a lot of your disposable income is taken up by debt repayments from the past and it’s causing you cash flow issues. In the short term, by prioritising paying off your debt, you may find that your finances don’t look any better – however, taking the time to pay off your debt in full means you can free up a huge sum of cash in the future. The sooner your debt is paid off the better!
Comparing prices allows you to work out whether you are getting the best deal on your bills. For example, you may be prone to sticking with the same suppliers for ease, but by taking the time to compare prices between a few different companies, you can ensure you’re not missing out on a better deal elsewhere. Changing can seem like a lot of effort, but if it’s going to save you money in the long run, to help you financially, it is worth it.
6. Check your credit report
Your credit report shows lenders what your history is like when it comes to repaying outstanding credit. If you come to apply for credit in the future, and your credit score shows an inability to meet repayments on time, lenders that you are applying for finance with will know that you are not creditworthy, and they will either decide to not lend to you, or you will incur a higher interest rate. Working on your credit score and your report means you are more likely to be approved for finance as and when you need it. This can be a huge help when developing your finances.
Infographic provided by Seacoast Business Funding – payroll funding services