WHAT’S your goal heading into 2025? How about achieving financial stability and maintaining it? It could do your mental health a lot of good, and set you up to live the life you want. Here are our suggestions to help you get there.
Spend less than you earn
Living within your means is essential to becoming and remaining financially stable. The opposite is unsustainable and will ultimately plunge you into debt.
Spending less than you bring in doesn’t mean cutting out all pleasures but being more mindful of where your money goes. Track your monthly income and prioritise essentials like rent/mortgage payments, utilities and food. If you’ve got money left over, then you can treat yourself, guilt-free.
Be wary of impulse purchases and consider whether your variable expenses align with your goals. Small changes, like brewing coffee at home or reviewing unused subscriptions, can accumulate big savings over time.
Reduce high-interest debt
Not all debt is bad, but the high-interest kind is a major obstacle to financial stability. The longer it’s unpaid, the more it’ll cost you.
Begin by listing all your debts, including credit cards, loans and overdrafts, along with their interest rates. Prioritise paying off those with the highest rates first – this is the most efficient way to minimise the amount of interest you’ll have to repay.
If possible, consider transferring balances to lower-interest accounts or consolidating debt into a single, more manageable payment plan. Every pound saved on interest brings you one step closer to debt-free living.
Take control of budgeting
Budgeting is your financial GPS. Without it, you’re essentially driving blind on the roads of personal finance.
Start by writing down all income sources and fixed expenses, such as rent and bills, followed by variable costs like food, transport and entertainment. With any money left over (disposable income), allocate funds to paying off debts, savings, investments or treating yourself.
A budget shouldn’t be a one-and-done thing – it needs reviewing regularly to keep pace with your changing circumstances and priorities. Budgeting apps and tools or simple spreadsheets make it easier to track spending and plan where your money is going.
Build your savings
Having savings to fall back on is a key part of financial security. If there aren’t any, an unexpected bill or occasion can quickly throw your planning off course.
Aim to build an emergency fund that could cover your living expenses for a couple of months, just in case. This cushion protects you against unexpected events like losing your job or your car breaking down.
Beyond this, set aside money for long-term goals, whether that’s a home deposit, a dream holiday or retirement. Save on payday to avoid being tempted into spending it.
Review your investments
Investing is a powerful tool for growing wealth and can help you make your money work for you. But it’s complex and there’s always risk involved.
You can take a less involved approach with standard investment accounts or get more hands-on with commodity trading or something similar. If you’re unsure, we would always recommend consulting a financial adviser for expert guidance.
Regularly assess your investment portfolio to ensure it aligns with your financial goals and risk tolerance. Diversify across assets, such as stocks, bonds and property, to spread risk.