We can all do with a little bit of help when it comes to our finances. After all, as we get older there are more money-related issues that need to be considered such as pensions, mortgages, and insurances. However, this can be difficult to navigate alone and become somewhat confusing very quickly if you are unsure of any aspects. Improving your financial capability will go some way towards improving your financial confidence and ability to manage money well, but what does this look like? Here are some tips on how you can do so in no time.
For some people, making the transition between childhood and becoming an adult is tough and means starting from the bottom of the financial ladder. Having no history of borrowing, no full-time job or any ongoing financial commitments leaves you in a state of unknown, so where to start? Well hopefully you already have a bank account, but if not, opening one up is a great place to start as it then opens up to many other things. With an account, you can then look to borrow money or have an overdraft as long as you have the income to support this. When starting out, you’ll more than likely have a poor credit score, but this can also be true of others who may have already had some financial difficulty, but there are bad credit loans in the UK that can help in this instance. You should avoid borrowing any large amounts to begin with as you’ll want to start building a positive financial history and only borrow when you really need to, such as in an emergency situation like a bill to pay or an unexpected repair. Slowly, you’ll build a history of on-time payments and show future lenders you are a trusted borrower.
Budgeting Your Income
One of the bigger obstacles is money management and ensuring you get the most out of your money each month. Rather than spending aimlessly, as tempting as it is, it will more often than not leave you with very little to put towards savings or other more important bills. Financial capability will help improve this situation and it all starts with working out your finances. You should be able to work out a basic income and expenditure and from their work out all of your essential payments, such as rent/mortgage, utility bills, phone contract etc, and anything non-essential. This should leave you with a disposable income that you can use for other payments throughout the month and help put into savings. By doing this, you’ll quickly see just how much you have spare and what you need to cut down on.
Improving Financial Knowledge
It’s impossible to know everything there is about finances but having a decent grasp of the basics will certainly improve your understanding and financial capability. Fincap.org.uk was set up to help people better manage their money and their commitment is to help adults in whatever stage of their life gain financial capability. The good news is there are many other sites that can help provide answers to the most common financial questions, so resources like The Money Advice Service and Citizens Advice are also great to help with your understanding of the basics. You don’t need to be a financial guru, but learning about APR rates, how mortgages and pensions work etc. will be extremely useful.
If your aim is to be more financially independent, going through these tips will hopefully start you on the right track to financial capability. Here’s to your healthy financial future.