What is going to happen in 2019? No-deal Brexit? An agreement of some sort? A general election? Nobody can be sure of anything at the moment. And it’s not just Brexit, there are unknown factors everywhere. Will Trump ratchet up his trade war? Will the global economy dip? Will supercomputers decide it’s time they took over? Okay, maybe that last one is a bit far-fetched but, still, no one knows what lies ahead. But what we do know is that the better shape your finances are in, the better prepared you are to ride out any storm. The really good news is that there are a few genuinely simple steps you can take to future-proof your finances, helping you manage whatever is thrown at you. Except the supercomputers’ takeover. It’s really hard to plan for that.
Make a budget
This is probably the single most useful thing anyone can do for their finances, whether you are living paycheque to paycheque or have money left over each month. Without a budget, you cannot ever be sure how much cash you have to spend, how much you can afford to save and where your money is going. Having a budget means having control of your finances and that has never been more important. There are some great online tools for drawing up a budget from scratch, including this free Budget Planner tool at the Money Advice Service. Essentially, you need to list your income and outgoings each month, including household bills, essential travel and other unavoidable costs. From what’s left you can see what disposable income you have and work out how much you want to save or use to clear debt. If you then split the remainder you know exactly how much spare cash you have every week – avoiding a situation where there’s too much month left at the end of the money. Seriously, if you do one thing from this list, make it this one.
Save some money
Whatever happens this year, having cash in the bank to help with any rainy days is essential. It means you don’t have to use high cost credit to pay for unexpected bills or emergencies like the boiler breaking down or the dog needing to have a sock surgically removed from its gut (what, just me?). Even if you have debts to clear, it’s still sensible to have some emergency cash before you start making overpayments. A financial buffer helps keep your finances secure. Some experts suggest having 3-6 months’-worth of salary saved but that can be hard if you’re already struggling to set cash aside. Try using your budget to work out an affordable amount you can save each week or month. Even if it’s small it will soon add up. There are even apps that can help you save without noticing. Speaking of which…
Get some tech in your corner
There are so many innovative apps available now and many of them can help you manage your money more easily and through your phone. If you’re comfortable with the new Open Banking rules then you can give certain regulated companies access to your banking data. That means you can benefit from apps that show all your accounts on one dashboard or which analyse your spending to work out a series of small payments that they can move into a savings account each month without you feeling the pinch. It won’t be right for everyone but it could make managing your money easier and more intuitive. Check out our guide to Open Banking to better understand the opportunities and risks.
Know the (credit) score
The last thing you want in a time of uncertainty is the risk of any more uncertainty like falling victim to identity theft. One way to mitigate any risk is to regularly check your credit score so that you can see exactly what applications or credit accounts are being opened and registered in your name It helps you stay alert to any problems and can act as an early warning sign so you can sort out identity theft issues fast. Regularly checking your credit score can also act as a bit of a financial health check. It helps you know what kind of credit you could qualify for if you needed to, but it also shows you have financially reliable lenders see you. If your credit score starts to drop then it can be a wakeup call to check over your finances and fix any problems.
Cut your outgoings
Whether you earn far more than you spend each month or you’re living on a tight budget, spending a little time checking you’re on the best deals can pay big rewards. If you could commit to spending even an hour a month looking over your household bills like energy costs or whether you’d save money moving to a cheaper lender then you could save hundreds or even thousands of pounds over a year. That can help you save, cut your spending and make you more aware of how much your outgoings are. You can even compare the prices of your food shop using websites like MySupermarket. And if you’re on your mortgage lender’s standard variable rate or you’re on a standard tariff for energy or your mobile handset is paid off but you’re still paying the same each month then there are almost certainly ways to save. It doesn’t have to be a massive time commitment but that money is better of in your pocket than in a company’s coffers.