Many people in the UK have less-than-perfect financial management practices. And even if your strategy is satisfactory, there is always room for improvement. As people work to achieve their financial goals, they tend to make mistakes along the way. Fortunately, in this piece, we have highlighted some of the things you can do to manage your finances better in 2020.
Manage Your Income
Before you get into details of managing your money well, there are some things you need to know. These things will help you manage your money wisely and even avoid cases of mis-sold pensions.
1. Set and Know your Financial Goals
When trying to manage your finances, the first thing you have to think of is your financial goals. You can get financial tips from professionals. Make sure that you deal with genuine agents who will not land you in issues related to mis-sold pensions. They will provide you with helpful and applicable tips so that you do not move in the wrong direction.
Maybe you are looking to retire early or even pay off your debts. All these can only work if you manage your finances well and set reasonable goals that you understand. Once you have set your goals, you have to do the right things that will get you there.
2. Write Down Your Assets and Liabilities
Try to create a list of everything that has value to you. These might include retirement, checkings, vehicles, IRA’s, bonds, home equity, stocks, and annuities. This step is crucial because it will save you from a mis-sold pension as it keeps you on the right track at all times.
Also, you should have space for all your liabilities. These are the debts that you might have accumulated in the previous years, along with any items that lose value over time. They might include personal loans, car loans, mortgage, student loans, balances, credit cards, and any other debt that you might be having.
If you are just getting started in this step, try to use a pen and paper since they work pretty well. While doing this, keep it simple but mention every single detail and their equivalent monetary value. There are other great options like using a free website or an excel spreadsheet.
3. Calculate Your Net Worth
While people think that it is hard to calculate net worth, it is one of the easiest things. You need to know your net worth for you to manage your finances well. To know your net worth, subtract your total liabilities from your total assets, and you have it. Again, this process works great with a simple pen and paper. But Excel also works great as it lets you use a formula to have the calculations done fast.
4. Have a Monthly Budget
The steps mentioned above reveal how you are doing financially. They give you a picture of what is happening and the areas that need improvement. With them, you can come up with a reasonable budget that helps you live within your financial limits. To create a budget, you must list down your total monthly income. Keep it as realistic as possible if you want to manage your finances well.
Also, you want to write down all your personal monthly expenses. These include student loan payment, rent, mortgage, cell phone bill, gym membership, and internet.
The Final Thought
People who do not manage their finances well are the ones who are most likely to become victims of mis-sold pension. However, with this guide, you will not have any financial trouble in 2020. Keep track of all your financial activities and make sure that you avoid impulse expenses. Only spend money if you have to, so that you save most of it for your retirement.