You work hard for your money, but is your money working hard for you? Many people think that they need to find a way to earn more money to get themselves into a more comfortable financial position. However, making more cash isn’t always necessary to improve your money situation.
Everyone has read the stories of high profile people, earning phenomenal amounts of money only to lose it all. You probably also know people on an average wage leading a comfortable life and able to achieve financial security before retirement. The disparity between these two situations challenges all the commonly held beliefs about money, especially in a consumerist society where we are encouraged to endlessly pursue the idea of being rich. So what is the difference between the high earners that lose everything, and those that earn an average wage and achieve financial security? The difference lies in not how much money they have, but the way that they manage it.
You can improve your financial situation considerably by examining the money that you do have, and then making that money work harder for you. Maximising your existing earnings and assets so that they are bringing you the biggest rewards is essential to making your money work for you. Getting your finances organised may sound like a daunting prospect, but understanding your current financial situation and how to improve it will be a significant weight off of your mind.
Examine Your Current Financial Situation
Achieving a level of financial security is a great feeling, but for many people always feels like it is out of reach. No matter what your current financial situation is, there will be ways that you can improve it and get yourself a step closer to living a life that is free from money worries.
Your first step is to start examining your outgoings versus your income. Seeing how much money you have available each month and understanding how you are spending that money is a crucial part of the process. You may be surprised to find that the way that you spend your money is very different than you thought. Try not to worry; the purpose of this exercise is to see how your money is being spent, so it is expected that there will be a few surprises along the way.
To keep your finances organised going forward, it is a good idea to set up a simple spreadsheet so that you can easily keep track of your spending which you can then update regularly.
Shop Around, Always
Now that you have a clear understanding of where your money is being spent, it is time to start trimming down those costs. Setting aside a few hours to give your finances a facelift is a great way to realise significant savings in a short space of time. Shopping around for the best deals can see you make huge savings each year on expenses such as utility bills, car insurance, mortgage payments, phone contracts, and more. Switching suppliers is an excellent way to save hundreds of pounds in the space of a few hours on your household bills. When switching, make sure that you won’t earn any penalties for leaving existing contracts. Otherwise, this could swallow up the savings that you have made.
Get Your Tax in Order
Tax is something that strikes fear into many people, and you may dread completing your self-assessment each tax year. Understanding the expenses that you can claim and researching tax breaks that you may be entitled to can be confusing and time-consuming. You can make simple tax returns and take the stress out of the situation by using the services of an accountant rather than trying to navigate through the process yourself. Receiving professional tax advice from an accountant is invaluable and likely to help you save money on your tax bill.
Building up some savings is a vital part of organising your finances. Unfortunately, life can sometimes throw curveballs in your direction, such as an appliance breaking, a boiler that needs repairing, or a car that needs replacing. Having a financial buffer available for these rainy day situations is crucial. Knowing that you have some money already in place to cover unexpected bills will take the stress out of these situations. Even saving small amounts each month is better than not saving anything at all. Putting your finances in order and saving for a rainy day provides peace of mind, and relieves the burden of money worries.