A guide to Personal Finance

Everyone has a unique situation when it comes to money: each individual out there has different demands on their resources, different working situations, and different amounts to save, invest or pay off. That’s why it’s so important to come up with a personal financial strategy that will work for you, and the beginning of a new year is the ideal time to start bringing your finances under control.

The first step should be to look at any existing debt. Organise your borrowing in order of highest interest rate and prioritise the top loan before even thinking about investment. More money will be lost in the long term if you’re paying out 18%+ every year, no matter how much you save elsewhere.

Short term cash funding like a pay-day loan is fine for emergencies, but you also have to make sure you can pay it off as soon as your income goes in.

Once you do decide to start saving, approach it as a regular payment, just as you would with monthly bills, only this time you’re paying yourself.

Whether it’s for a retirement fund, mortgage or your child’s university fees, decide on a realistic amount that you can divert away from your monthly expenses. Investing in your own future security is one of the most vital steps you can take.

Balancing your cheque-book is no longer a common habit; many people rely on their bank to get the sums right. However, keeping monthly records is a healthy habit to start as part of your money management and the only way you can see what you’re spending – item by item – against what you earn. From this, it’s possible to draw up a budget by assessing what’s essential.

The best advice is to write down financial goals to achieve by the end of the year; the exact figure you intend to pay off and the figure you wish to deposit into savings accounts or investments elsewhere. By developing a financial plan in this way, you give yourself motivation to tackle your debts, savings and budgeting in order to make it a reality.