Money management is important. We all need money to get by and you need to manage this money well to ensure that you can always pay for the things you need to and that you can do more things you actually want to do. Here are some steps you can take to achieve this!
Come Up With a Budget
The biggest and most important step you can take when it comes to taking control of your finances is to come up with a budget. This is a tool that will show you how much you have available to spend and can prevent you from falling into debt.
- Understanding how much you take home each month – when you work a job, you’ll either be told an annual or monthly salary you’ll get, an hourly wage or another figure. Don’t make the mistake of thinking this is how much you will have available to spend. You need to remember that tax and contributions such as national insurance are deducted from this amount. The amount that lands in your bank account will differ. So, find out how much you’ll actually have available to you after these deductions each month. There are a number of online calculators that will help you to determine how much tax and other contributions you will pay. Remember that this amount will change depending on how much you earn each year and which tax bracket you fall into.
- Deducting your bills – the next step to take when budgeting is deducting your bills and other essential outgoings from your take home pay. There are certain necessities that we all need to pay for and you will fall into debt or break contracts by failing to pay for these. Common essential expenses include rent or mortgage payments, council tax, energy bills, water bills, food shopping, car payments, insurance payments and credit card or loan payments.
- Disposable income – once you’ve found out how much you take home and you’ve deducted all of your essential payments from it, you should be left with a figure. This is known as your disposable income and this is the amount you have available to spend on what you want. Whether that’s dining out, social activities, hobbies or anything else, you need to make sure that you don’t spend more than this figure. If you do, you’ll be using credit and you will slip into debt.
Use an Accountant
If you are an employee, chances aee you don’t really need the services of an accountant. Your employer will deduct your tax and other essential contributions (like national insurance) from your wages before depositing them into your account. But if you’re self employed or run your own business, chances are, you could use chartered accountants to make money management easier for yourself. An accountant will sort your taxes out for you and ensure you pay everything you should on time.
Use a Financial Advisor
Unsure of how to use your money wisely? A financial advisor can help you to manage your money in a way that is beneficial to you. Whether that’s making investment recommendations, saving recommendations or any other recommendations.
Hopefully, the above information will help to keep you on track! Try the steps out and you’ll feel the benefits before you know it!
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