The Reasons Your Financial Situation Isn’t Improving
Sick of struggling with money? Economic insecurity is ‘new normal’ in the UK with at least 70% of the UK’s working population “chronically broke”. Break the cycle and achieve improve our financial freedom this year. Here are the simple reasons your situation isn’t changing- and what you can do about it.
You’re in debt
Being in debt is expensive. When you borrow money from a company, not only do you have to pay this back, but you also pay interest on top. Often it is this interest that can cause your debt to spiral out of control. Many people find twill pay off twice, even three times or more what the original debt cost because of the interest.
If a large portion of your monthly budget is being spent on debt but your balances aren’t going down fast, it’s time to take action. Take on some extra shifts at work. Try selling things you no longer need, give up all of your luxuries for a while to free up cash and stick to a monthly budget. If the balances are large and out of control, it could be worth speaking to a debt charity or agency. They can often work with creditors to have interest rates frozen, allowing you to get back on top of things again.
It might also be worth considering looking into a 0% balance transfer. A 0% balance transfer credit card can help you pay off your outstanding credit card debt by moving the balance from one card (or multiple cards) where you might be paying interest to a new one at a 0% interest rate for a set period of time. Martin Lewis, the Money Saving Expert, has recommended moving outstanding debt to a 0% balance transfer credit card if you’re stuck in a cycle of paying off interest.
You live above your means
Even if you’re not in debt right now, if you live above your means then you soon will be. Are you guilty of purchasing luxuries before you’ve paid your bills? Do you treat yourself as soon as your wages land in the bank, and do you lead a lifestyle you know that you can’t afford? If you find yourself feeling ‘rich’ at the start of the month and poor at the end then it’s a sign that you’re not budgeting effectively. As soon as your paid, your priority bills should be transferred into a separate bills account. Then you need to cover things like groceries, gas or travel and other necessary purchases.
Once all your essentials are paid, put some money aside into a savings account. Having a small rainy day fund will prevent you from getting into debt should the unthinkable happen. Only after bills are paid should you consider buying luxuries like nights out, takeaways or shopping trips. Take the time to budget effectively for your necessities. And shop smart when it does come to spending on luxuries.
You waste money
Many of us waste money without realising, even frugal households with the best of intentions with money can do it. Maybe you don’t use comparison sites to make purchases or to get the best deals on your bills, or perhaps you buy too much food where you’re trying to be organised but it spoils and ends up in the bin. Have a careful look at what you’re spending and see if you can find ways to get these costs down.
An easy way to save money is buy using cashback websites when shopping online. I’ve earned over £500 in the past few years by shopping through TopCashback. This a simple, yet cost effective way to reduce the amount of money you waste.
Another way to reduce wasted money is to plan ahead. Making a plan of your week and where you will need to spend money can save you £100’s over the year. Switch to cheaper alternatives, and cook your meals in advance. Or ever having the time to compare prices and look for discounts. The more time you have to plan ahead the more likely you are to make informed consumer choices.
Your employment prospects are limited
If your employment prospects are limited and you’re stuck in minimum wage jobs it is likely that you will always struggle with you finances. The way out of this is to invest in yourself, sign up to an online school like Bradley University and earn a degree. See if you qualify for a student loan, or financial support. It may seem counterproductive getting into debt, but borrowing money for university is ‘good debt.’ A better job will allow you to pay it back and put you on a much better path for the future. If university isn’t an option for you then you could still consider taking up some extra training, volunteering to gain experience, or setting up your own side business.
If you’re looking to improve your financial situation then reading this post is just the first step. You now need to take action. Evaluate your spending and cut out non-essentials. Find ways to increase your income; be that through employment or extra side hustle earnings. Regardless of your starting point, progress can be made and it is possible to achieve your own version of financial freedom.