A New Year Budget: Getting To Grips With Personal Finance

PIN FOR LATER

I’ve never had a great relationship with money. For much of my twenties we barely made ends meet. We married young, I was a stay at home Mama, and money was tight. We made bad decisions, spent when we should have saved and frittered away any money we did have.

In my thirties things looked up, I was working freelance, my then-husband was earning more, and life felt more stable. Yet we still didn’t have a good financial plan. We still lived paycheck to paycheck, money came and went.

Fast forward a few years, and I suddenly found myself a single Mum of four, and then after a disastrous relationship, a single Mum of five. Life was tough, my mental health wasn’t great and I made some bad decisions financially.

Now, in my early forties, I’m trying hard to change my narrative. Cost of living is through the roof right now, everything seems to cost so much. As a single-income household, it is hard. YET…. I’m putting plans into place, creating a budget, clearing debt and working to build some savings.

There is so much I wish I had been taught when I was younger about money. I’m making sure that my own children grow up with a better financial mindset than I had.

Here are 7 tips to getting a grip of your personal finances;

1. Assess Your Current Financial Situation: Begin by taking a close look at your current financial standing. Analyse your income, expenses, debts, and savings. Understanding where you stand financially will help you identify areas that need improvement and set realistic goals.
2. Define Short-Term and Long-Term Goals: Break down your financial goals into short-term and long-term objectives. Short-term goals could include building an emergency fund, paying off credit card debt, or saving for a vacation. Long-term goals may involve saving for a home, education, or retirement. Having a mix of short and long-term goals ensures you stay motivated while planning for the future.
3. Make Your Goals SMART: Make use of the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound) to make your goals more tangible. For example, instead of a vague goal like “save money,” make it specific and measurable, such as “save £5,000 for an emergency fund within the next 12 months.” This makes it easier to track your progress.
4. Prioritise and Organise: Prioritise your goals based on their importance and urgency. Organise them in a way that aligns with your values and life priorities. This ensures that you focus your energy and resources on what matters most to you.
5. Create a Budget: Develop a realistic budget that aligns with your financial goals. A budget acts as a roadmap, guiding your spending habits and helping you allocate resources efficiently. Use an online budget calculator to help you. Regularly review and adjust your budget as your financial situation evolves.
6. Establish an Emergency Fund: Prioritize building an emergency fund to cover unforeseen expenses. This financial cushion provides peace of mind and prevents you from derailing your other financial goals in times of unexpected setbacks.
7. Regularly Review and Adjust: Periodically review your financial goals and assess your progress. Life circumstances change, and your goals may need adjustment. Be flexible and adapt your plan to accommodate shifts in income, expenses, or priorities.