With the financial year coming to a close, it’s time to give your finances a makeover. If you have debts accumulating and your credit score is low, you can still use basic banking to organise the money you already have in order to get back on track.
Follow this five step plan to overhaul your finances and get back in control – it may be easier than you think.
1. Create a budget
Work out how much you spend on fixed monthly outgoings and how much goes on variable items. You can then examine your variable spending habits and make necessary changes. The key is to create a budget that is reasonable which you feel you can stick to, then prepare in advance for expensive months that could involve birthdays or holidays.
2. Ditch the credit cards
Having many credit cards can mean multiple debts that are easy to lose track of. Stop using them as soon as possible and then focus on paying off one credit card at a time, starting with the one with the highest interest rate. Once one card is paid off, move on to the next. Reduce your amount of cards to one or two to break the cycle.
3. Open a basic bank account
Basic bank accounts are available to those even with very low credit scores. It’s a great idea to look for one that has a prepaid credit card scheme. These allow you to divide up your finances into essential monthly outgoings that you keep in your account, and money for variable outgoings that you put onto the prepaid credit card. This organises your money so that variable spending does not eat into your fixed monthly amounts, meaning you will always be able to afford your bills and rent.
4. Start paying all bills on time
If you pay your bills as soon as you receive them, there is no danger of forgetting about them or incurring late payment penalties. Swift bill payments will improve your credit score and allow you get a better feel for what your monthly outgoings are going to be.
5. Stop taking out loans
Loans can have secret high interest rates that can cause more debt. If you find that the money you already have simply isn’t enough to cover living costs, then it is time to consider secondary sources of income rather than resorting to borrowing.
These five simple steps are sure to get you back in control of your finances this spring. You’ll soon find that being sensible with your money really pays off!
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