Would you like to be better with your finances?

Okay, lets phrase that another way. Would you like a nicer lifestyle and fewer money worries without the need for a big pay rise or second job?

Assuming the answer is yes, I have some good news for you:

You can do it, right now – today, this week, this year – and it’s not a painful process.

The key is understanding your finances and making them work for you – which you may think is obvious, but as a nation, we’re generally not very good at keeping tabs on our money. Instead of fully understanding how our finances can work for us, we live day to day just ‘getting by’.

Well, that’s about to change. We’ll take you through 7 steps that will transform your money situation as quickly as you want to get started.

  1. Understand where you are now

If you’re going to tackle any problem, you need to know what the situation looks like right now.

So, in this instance, that means dragging out letters, bank statements, credit card bills, household bills and any other paperwork that relates to your money.

If that’s going to be a problem you need to order a file that will keep you organised moving forward. An expanding folder with sections for different types of paperwork is ideal.

If for any reason you don’t have that paperwork to hand, see if you can log into your accounts online – or speak to companies and order replacement paper statements. This whole thing might feel like a pain if you haven’t been great at admin until now – but believe us, having all your financial information in one place is absolutely key if you’re going to be able to assess your position at any given moment going forward.

  1. Get your credit score

You may not realise it, but you’re entitled to your credit file for essentially just the admin fee of having it created.

This is another important step of working out where your finances are now. While there are services online that will offer you this information for free – it’s useful to have what’s known as your ‘statutory credit report’ so you know what different credit reference companies see when they search for you.

Make sure you enter as many of your previous addresses as possible when you request it – credit companies request this information, so it pays to know what they’ll see.

When you’ve got it, check it over very carefully. There might be debt or lines of credit on there that you have forgotten about – in which case these companies need to be updated. There’s also a chance that there’s information on there that you don’t recognise – and if this is the case you should speak to the companies involved to understand more.

It’s possible that mistake occur – but it’s also possible that your ID has been stolen – so order your credit score and work out what’s happening.

  1. Do some financial housekeeping

A huge amount of people don’t know what goes in and out of their account each month – and, even the ones that do are often paying for things they just don’t use.

So, have a good look at your direct debits and recurring card payments and ask yourself some questions:

  • Do I still use whatever this product is?
  • Does this product represent value for money for me now?

The answer is often no – whether we’re talking about gym memberships, TV services or a host of other smaller payments that you might not notice until they start to add up.

Your bank or the company you’re signed up with will normally let you cancel these fairly easily, so ditch anything you don’t need and keep the money in your pocket.

  1. Create a budget

We know, budgeting doesn’t sound like fun – but when you get into it, it’s amazing how much money you can free up.

Start by listing all your income – follow that with a list of all your necessary expenditure in the month – we’re talking rent, mortgage, utility bills, credit card payments – and so forth.

Add up both figures and take the necessary expenditure total away from the total income figure – leaving you with what’s known as ‘disposable income’ – i.e. money that can be budgeted for spending on non-essentials elsewhere.

You can now start dividing this remaining monthly money up as you see fit. So, perhaps you’d like to put an upper limit on the food and groceries shopping you do? Put maximum amount of money on take away or nights out? It’s not a problem when you’re aware of what your spending looks like!

  1. Start saving (even just a little)

Now you’ve got a budget in place it’s time to start putting a little bit aside to account for any financial issues you might run in to.

Saving doesn’t work if you just hope for the best and plan to put away whatever you’ve got left over each month – but when you start to see saving as an expenditure, it will work well for you.

  1. Follow good advice

If you’re finding it tricky getting to grips with all the money you owe it’s important to use a service that gives you an objective overview of the options that are out there for you. Using a site like www.facethered.com give you a head start on this subject – with objective reviews of suitable services and understandable information detailing your options.

No one goes it alone with their finances, so just make sure you get the right kind of advice.

  1. Track your spending

When you’ve got a really good handle on where your money situation is currently, there’s no better way to stay on top of spending by tracking your outgoings.

This might sound like a big job – but in reality it will take you less than 5 or 10 minutes every day – and it’ll shed some amazing light on what you spend. There are online services and apps available so you can get some visual representations of where you money is going – but it can be just as effective creating a simple spreadsheet.

We’ll end with a warning! You’re likely to be shocked when the figures start to add up. A little spend here and there becomes an absolutely enormous spend over the course of a week, month or year, but, it’s good to embrace the feelings of shock you’ll get – because when you realise that cutting down on nights out or take away could see you debt free or on a luxury holiday – you can make informed decisions about where you’d like to be spending your money…