Five personal finance habits we should all adopt
While most of us think we’re pretty good with our money, we can all benefit from giving our finances a regular health check.
If you’re looking to get to grips with your finances and develop better habits, then setting yourself some financial goals and drawing up a budget is a good way to get motivated. Priority debts are those that have the most serious consequences if you don’t repay them, and aren’t necessarily the ones with the highest interest rates. They include your mortgage and rent, council tax and utility bills. These need to be paid first. It also makes sense to keep a firm grip on your credit card spending. Once you have worked out your budget, you’ll know how much you can save each month.
HAVE A RAINY DAY FUND
Everyone needs to have some money put away for emergencies, and for the bigger, more exciting things in life like a special trip, a child’s education or a wedding. So, for most of us having some cash that we can access quickly to pay for unexpected things like an unforeseen bill, and some that steadily builds up for the future, makes good financial sense.
SAVE FOR YOUR RETIREMENT
Even if it’s currently decades away, if you’re working you need to be saving for it now. Pension contributions attract tax relief, and if you’re in a company scheme, your employer may pay into the scheme too.
LIVE BELOW YOUR MEANS
Life’s little expenses like a trip to the coffee shop eat into your cash. A daily £2.50 coffee would leave you worse off by £875 a year, meaning one small lifestyle change could leave you hundreds of pounds better off.
MAKE THE MOST OF YOUR MONEY
Once you’ve got your debts under control, got your emergency fund set up and begun to save regularly, then it’s time to think about investing for your future. If you’re new to investing, a stocks and shares
ISA can be a great place to start. They are tax-efficient, and many offer you the opportunity to pay in a lump sum or make regular payments.
Are your belongings protected against life’s unwelcome events? Home insurance is an effective shock-absorber that protects millions of families each year and provides them with valuable peace of mind.
Having a home contents insurance policy in place means that if the unexpected were to happen, such as a burglary, leaking pipe or a devastating fire, then there would be a payout to help put things right. However, recent figures from the Financial Inclusion Commission (FIC) show that an alarming number of adults don’t have any insurance in place to protect their personal possessions.
Families need protection
With the average value of contents in a three-bedroom family home estimated at £55,000, it’s important to be fully insured at all times. The November 2017 FIC report shows that 1.2 million successful claims were made on household buildings and contents cover in 2016, with an average payment of just over £2,500 being made. For many households without cover, having to find this amount of cash to replace lost, damaged or stolen items to this value would be beyond the limit of their savings.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.