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How to build your money confidence

During times of uncertainty, staying on top of your money can feel like a huge challenge. Build your confidence with our practical tips on managing your finances.

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The events of 2020 may have put tremendous pressure on your finances, as well as your emotional wellbeing. If you’ve been worrying about money on top of concerns about the health of your family and friends during the pandemic, you’re most likely feeling exhausted at the moment.

Facing your finances might be the last thing you want to do right now, but approaching how you’ll manage your money in the next few months could ease your stress. You might find putting steps in place to keep a close eye on your finances leaves you feeling more positive about the year ahead. We’ve compiled some tips to help you feel more in control during these uncertain times.

The best way to get started is to write everything down in one place so you can see exactly how much money goes in and out of your current account each month. If you don’t already have a budget for your monthly spending, such as food and travel costs, read our guide on how to create a budget.

If you use online banking, your bank’s app might already label your spending into categories, such as entertainment, groceries and clothes shopping, so you can see an overview of your spending patterns and set budgets. If your bank’s app doesn’t provide this, you might find a free budgeting app, such as Yolt or Money Dashboard, useful.

Once you’re aware of your usual monthly income and outgoings, you can start keeping a planner to help you decide what to do with your money on a monthly basis. Grab an empty notebook and allocate at least one page for each month of the year. For each month, write down your expected income, all of your fixed expenses (such as your mortgage/rent and utility bills) and your minimum debt repayments. Then write a breakdown of your budget for other expenses that will come up that month (food, clothes, gifts, travel) – this will likely vary from month to month. At the bottom of the page, work out how much money you’ll expect to have left that month and plan how you’ll use it. You could choose to move some of it into a separate pot to cover your annual expenses (such as the car MOT), use it to pay down some debt or transfer it into your savings account. This combination of monthly budgeting and planning makes it easier to track where your money goes and should help you to feel more in control of how you’re using it.

A higher credit score can improve your chances of being approved for a credit card, loan or mortgage at more affordable rates, giving you more piece of mind when you apply. If there’s room for improvement in your credit score, see our guide to improving your score in 10 easy steps.

Using credit responsibly is a key part of building and maintaining your score. To get a high credit score, you need a solid credit history that proves to lenders you’re able to manage your debts. Putting a few purchases on a credit card that you know you can afford to pay off each month can help build up your credit history, which will see your score improve over time. Log in to your account to check your credit score.

You can also use our personalised Coaching plans to discuss your financial goals and plan how you can work towards reaching them.

If you’ve been dealing with debt, you’re not alone. Research by the UK debt charity StepChange found that in November 2020, 5.6 million people were in arrears or had to borrow to make ends meet. It estimates that in the same month, 1.2 million people in the UK were in severe debt. Keeping your debt in check might feel like an uphill struggle, but there are steps you can take to feel more in control.

If you have several debts and you’re unsure which you should prioritise, write a list of all your debts. Look through your list and label each one as either a ‘priority’ or ‘non-priority’. Priority debts are things like your mortgage or rent, any loans secured against your home, gas and electricity bills, and council tax. Missing payments for any of these can have serious consequences. For a full list of what counts as a priority debt, see our article on how to get out of debt. Your non-priority debts might include credit card or store card debts, overdrafts, payday loans, bank or building society loans or money borrowed from friends or family.

There are two main ways to reduce debt: the first is to save enough money to pay down some of your debt; the second is to move your debt onto a cheaper deal. If you have some savings, you might want to consider using them to pay off debt. The interest charged on borrowing will probably outweigh the interest you are earning on your savings, so it might make more sense to clear your debt rather than leaving money sitting in a savings account. When it comes to organising your non-priority debts, like cards and loans, you’ll need to compare the interest rates on each of them. Start paying off the ones with the highest interest rates first, as these are your most expensive debts. Just double check whether you’ll face any penalties for paying off your debt early.

If you would like to cut down your debt by moving it to a cheaper deal, a balance transfer card or a debt consolidation loan might be a suitable option for you. If you’re currently paying a high APR on your credit card debt, or you have several cards that you’re paying off, you could save money on interest by moving your debt onto one balance transfer card. Balance transfer cards typically offer an initial interest-free or low-interest period, which could allow you to pay off your credit card debt for next-to-no cost over several months. A balance transfer card also allows you to put all your card debt in one place. With just one monthly payment to worry about instead of several, you might find it easier to keep on top of your payments. Just bear in mind the date when the initial interest-free or low-interest period comes to an end on the balance transfer card.

A debt consolidation loan allows you to move all your debt (such as personal loans, credit cards and store cards) into one place. This means you’ll have one big loan to cover the amount of your current debt, rather than several smaller ones. Debt consolidation loans can either be a secured or an unsecured loan. A secured loan means the lender uses something you own – like your house – to secure your debt. If you fail to repay the loan, the lender can sell this to help recover the money you owe them. An unsecured loan isn’t secured by anything you own. A secured loan usually has a lower rate of interest than an unsecured loan because there’s less risk for the lender, but there’s a much bigger risk involved for you.

You don't have to deal with money worries alone. It can feel daunting to face financial problems, but talking through your concerns could make things feel more manageable and improve your outlook. If you need to talk to someone, try reaching out to a charity helpline to discuss what’s causing you stress. Mind and Samaritans have support helplines to provide a listening ear. They might also offer you help in coping with the emotional and psychological impact of financial worries.

If you would like free guidance about how to manage your money or debt, you can contact Citizens Advice or the Money Advice Service. You could also speak to a debt advice charity, such as StepChange, National Debtline or the Debt Advice Foundation. You can either call their helplines, send an email or discuss your situation in a web chat.


Sophie is our editorial expert who makes information about personal finance easier to understand.