When it comes to creating a plan for your finances, the truth is that nothing is going to change until you decide to start. No one is going to give you permission to set your goals into motion - so set some time aside, roll up your sleeves and let’s get to work!
Know where your money is
Keeping on top of where your hard-earned cash is located sounds simple, but you’d be amazed at the number of us who lose track over the years. Life changes, moving home, all contribute to us forgetting about the bank account we opened years back, or the credit card we applied for and hardly used. So when starting to create your plan, having an overview of all the places you could have money stored is a good place to start.
We talk about understanding the full range of your financial assets in a separate article, but for now let’s keep it simple and start by focussing on your bank accounts.
Make the time to go through your cupboards and drawers to find old bank statements and check books, or log into your banking Apps.
Start by writing down each one of your bank account numbers, the name of the bank and the balances within them. You can either write this information in a notebook, create an excel sheet, or use a money planner App to log these details electronically.
You’ll begin your journey to taking ownership of your finances with a better picture of your cash situation. You may even find the odd account which you had completely forgotten about!
Be clear on all your debts
Having a plan for investing is great, but if your debts are overwhelming your ability to put money aside, getting a clear picture of your debts is key to creating a plan to reduce them. This could be anything from high interest credit cards to student loans. If your credit cards are charging you a high interest rate each month, prioritizing paying down these debts as soon as possible makes absolute sense! However, debt which you are diligently paying off month by month shouldn’t stop you on your path to investing, your aim should be to reduce your expenses as far as possible, and if you can, also put some cash aside which is growing while your expenses are decreasing. We’ve got tips and inspiration from the Sika Republic contributors on ways they are paying down debt and putting a little something aside, which will inspire you to start.
Check out your Credit Report
A credit report is a summary of how you’ve handled credit in your name over time. It tracks how you manage your bank accounts, credit cards, loans and other financial services. Your credit report assigns you a credit score. If you want to open a new bank account, apply for a rental property, take out a car loan, or even apply for a mortgage, these types of companies will review your credit report, check your history of keeping up with payments over time and make a decision on whether to approve you for their products or not.
Make sure you check your credit report before you need it! A good credit score can open the door to a wide range of competitive products at great rates. The three major credit report agencies are Experian and Equifax, plus TransUnion in the U.S.
If you don’t have a good credit score, there are ways that you can improve it over time. A credit report is also a great tool to reduce the chance of fraud. If someone is taking out debt in your name, or if you are linked to someone else debt – a family member, an ex-partner, a housemate, your credit report could alert you to it and set you on the road to taking action.
Cancel unused monthly subscriptions / Direct Debits
We all have them, those payments going out of our account on a monthly basis for services we no longer use. That TV, or music streaming service we haven’t logged into for months. That magazine subscription which stopped posting out its latest issues’ months ago. This is a good time to view your bank statements, your Google or Apple account settings and check whether money is going out which could be put to better use by cancelling those subscriptions.
Paying for the same insurance cover more than once?
A great way to save some coins is to check whether you are receiving cover for the same services on products such as your bank accounts, credit cards, membership services or other subscriptions. By doing a bit of research, you might find that you receive the same mobile phone insurance cover from your cell phone provider, your credit card and your bank account. If that is the case and you are paying a monthly fee for these insurance products, work out which package gives you the best overall cover and consider cancelling the others. If you don’t know what you are covered for, reach out to your product providers and ask them to email you details of the package you are signed up for – at some point there will have been contract terms that you signed.
Insurance for the long term
Whether you are single with no dependents, have children, godchildren, or nieces and nephews who you want to protect for the future, looking at your insurance coverage is always a good thing. Think of it as an investment for the long term which you may not financially benefit from, but those who depend on you financially certainly will. Although we don’t like to think about it, life insurance provides money which can replace your income, or settle outstanding costs such as paying off your mortgage when you die. Even if you don’t have children, maybe your parents, or your partner rely on you financially. If you are a stay-at-home parent, don’t rule yourself out – imagine how much it would cost your family to hire someone to do all the tasks you fulfil to keep your home running on a daily basis! Whether you are a millennial, or an older person, there will be a life insurance product for you.
It’s true that you will have access to cheaper policies the younger and healthier you are when you start, but older people and those with underlying conditions, which would not be categorised as severe, can still find policies to suit your needs.
Our aim is that your salary is not the only source of income building your financial future.
At Sika Republic our aim is that your salary is not the only source of income building your financial future, so consider a good life insurance policy as one other source of investing for your dependents, even beyond your lifetime.
In summary, getting a good picture of the state of your finances, by getting your house in order is the first step towards knowing your net worth. Its not only for the billionaires in Forbes; we should all start our financial journey by dedicating time to knowing where our money is coming from, where its going and how we can make better use of it for the long term.
Now, after reading this, you're probably ready to learn more, so take a look at the links within this article for more great information and answers.
Our aim is to provide you with resources which make understanding your finances and setting financial goals a whole lot easier!
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