How you can control you finances - Heather McGregor
Advice from a finance expert
Advice on how to control your finances and the steps to take to put you in charge.
Information is power
The more you know about your finances, the more in control of them you will be. Start a financial notebook. First, write down your financial goals for the year ahead, the decade ahead and for the rest of your working life. Identifying your goals will encourage you to make plans to reach them. Next, work out your earnings on an hourly, daily and weekly basis, to help to put your spending into context. Knowing how many hours of work it takes to buy that €200 dress may help inform your decision to buy it. Then, make a note of your major monthly outgoings, including debt-repayment schedules, utility bills and mortgage or rent. This is the information that any lender asks for when assessing your ability to repay, so it will be useful to have it to hand for the future.
Deal with debt
When you are borrowing money, the key question to ask yourself is, "Am I borrowing this money for something I really need, or want to do? Or is it just funding my lifestyle?" Investment borrowing - to buy education, a home or a business - is, in my opinion, a good use of credit. If you are already in debt, list all of it in your notebook, plus interest, and what it costs you each year; for example, your mortgage, credit cards or student debt. Look at your noted incomings and outgoings, and develop a strategy to pay it back - make repaying the most expensive debt a priority. It is likely that some of your debt will be on credit cards. Find out the interest rate you are paying on each of them and replace expensive cards with cheaper ones. I recommend transferring the balance from a high-interest credit card to a card that offers a lower rate, then pay off the outstanding balance as quickly as possible.
Check your credit
Get your credit rating checked before you borrow money or apply for a new or cheaper credit card - it's the best money you will ever spend. Check that all your information is listed accurately, and set about changing it if it is not. A better credit score means that, in the future, when you come to borrow money to buy a house or car, you will be offered better rates.
Start the habit
Saving money is a habit, though one that may take time and effort to acquire. The important thing is that you get into doing it, as you never know when your financial circumstances might change. If you haven't got a savings account, set one up with €10. With a standing order, pay an amount of money in each month - be ambitious, as you can always change it. Every six months, review your savings account's interest rates and swap to a new one with a better rate, if available. Making small lifestyle adjustments can often save you money. Start a diary and note down all that you spend. Review it after a week or two and identify some cost-cutting targets: could you go without your morning cappuccino or smoothie? It's easier to make changes like these while you are still in control of your bank balance, rather than when you're down to the last few pounds.