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There’s more to having a healthy financial status than just understanding how to move forward from debt problems. Money management, keeping to a well thought out budget and knowing where to turn when the going gets tough all factor into a much broader approach to personal finances.
Preventing yourself from falling into debt difficulties can often be a much more effective strategy than dealing with your finances as they become an issue. To learn more about how you can stay on top of money matters, keep reading and click through to our in-depth articles.
UK Household Debt
The UK is a nation of debtors, with an average total debt of £60,363 per household. Whilst this may sound like an alarming figure, not all household debt is problematic and if managed correctly it can form part of a wider picture of financial stability. Despite this, there are of course people who struggle to keep up with their debts and find themselves in a cycle from which it can be difficult to recover from.
Budgeting
One of the most straightforward ways to improve your financial situation is to devise a sensible and realistic budget, and then stick to it. The old adage of ‘living within your means’ still applies today, but just because you’re keeping to a financial plan doesn’t mean you have to go without your hobbies and interests or a treat now and then.
The key is to ensure that the budget you set genuinely reflects, and is suitable for, your financial situation. This can be harder than it seems and in many cases a budget needs to be approached with a degree of flexibility as it can be difficult to predict what life will throw your way.
The best UK budgeting apps
Budgeting doesn’t have to be just another pen and paper exercise, particularly when there are a great number of apps and digital services out there ready to do the hard work for you. With open banking now established in the UK, it may be easier than you think to analyse your spending habits, work out a budget and even start saving money by putting aside spare change from your purchases.
Debt to Income Ratio
When deciding whether you are eligible for financial products, lenders look at more than just your credit score. One important factor is known as your debt-to-income ratio (DTI), which in simple terms reflects the total amount you owe each month versus the amount you earn.
Understanding how to calculate and even improve your DTI can be a helpful step on the path to greater financial security and control over your debts. As your DTI may be considered a measure of whether you will be able to repay any new credit that you take out, knowing more about this element of your financial status could even help you to make more informed credit applications.
Saving Money
Saving money is no mean feat, particularly for those who are attempting to combat increased living costs or existing debts. Even despite the difficulty of saving money there are lots of ways to do it, many of which may be easier than you’d expect.
Although simply stopping spending or increasing your income are some of the more direct routes towards saving money, they can be harder than they seem and are not achievable in all situations. For most people, there are small changes that can be made that can result in significant savings on everything from utility bills through to insurance and even social activities.
Coping with Life Changes
Life is unpredictable, and unfortunately, we all face difficult situations at one time or another. Whether you’re suffering from ill health, have separated from your partner, have lost your job or experienced any other major shift in your life, it’s worth keeping in mind that your finances can be affected just as much as your emotions and relationships.
If you are dealing with a difficult situation, getting support from a financial adviser could help to relieve some pressure from you whilst keeping money matters in check. Learning more about the financial implications of a major life event can also be useful and help you to decide the best way of moving forward.
Emergency Funding
It’s not just major life events that can have an impact on the status of your finances, and it’s easier than you might think to fall into a cash crisis – where you urgently need to access money for essential costs.
If you’ve had your regular pay or benefits delayed, have lost your job or are faced with a bill that you just can’t afford, there are options out there. Paying for a vehicle or boiler repair or for groceries and other basic items doesn’t need to be such a struggling and emergency funding can help you to keep going whilst you get back on your feet.
Inheritance
Inheritance is a delicate topic, but also one that can prove to be very important both for the person leaving behind a legacy and their beneficiaries. Understanding how money is handled after death, the probate process and taxation is an important aspect of financial planning and can take considerable time even with the help of qualified financial and legal advisers.
It is also important to consider how to use any inheritance that you receive. Windfall payments can have an impact on your financial status – not least if you are subject to certain insolvency or debt solutions. Everybody wants to maximise their money and knowing how to treat an inheritance can help you to use your finances most efficiently.
Debt After Death
Dealing with the death of a loved one is difficult enough without adding financial concerns into the equation. There’s no denying that wrapping up a person’s finances after their death can be stressful and even upsetting, but in most cases, it doesn’t have to be complex. Many people worry that any outstanding debt a person had at the time of their death will be passed onto their relatives, or that money will be taken from their estate.
These are complex questions, and the answers will very much depend on individual circumstances. As with any financial topic, however, the more you know the better and you may feel more in control after finding out about your options – whether putting your own finances in order or dealing with those of a loved one.
Money Management and Budgeting for Students
There are lots of myths, rumours and misconceptions surrounding student loans and the ways in which they are calculated and paid out. Money matters often top the list of concerns that prospective students and their parents have, regardless of what they want to study or where.
Even though student loan instalments can seem like a significant windfall, stretching your budget over the course of a term or a year can be difficult – particularly when you factor in the costs of textbooks, groceries and of course an active social life. Keeping yourself in good financial shape is as important whilst you a student as any other time and can prepare you for life after study.
TV License
Television is one of the UK’s most prominent sources of entertainment, with each one of us watching an average of over 19 hours of TV content each week. Whether you watch live, record programmes as they’re broadcast or watch via catchup services, you need a valid TV license in order to comply with the law.
Watching live TV or even using an online catchup player without a license could leave you at risk of being prosecuted and perhaps even issued with a fine of up to £1,000. Although television can be an important aspect of life, helping people to stay connected and providing a valuable pastime, with an annual TV license costing over £150 some people may feel that their budget just doesn’t stretch to cover this staple of household entertainment.