1) DIY Budget is a Recession Buster
The Budget is usually when the Chancellor tries to balance the books. However Alistair Darling and Gordon Brown may find it difficult to do so in light of the global economic climate. That is not to say you can't balance your own books and get your family finances on track for 2009/10. We provide some sage advice and action points that could make the recession easier to survive!
2) All in the Same Boat
It's not what you earn that determines your financial future, it's all about how much, or how little, you keep! The stark reality is that most of us are not good with money and that goes across the board from manual workers to company directors. The truth is that most people don't have an income problem - they have a spending problem."
3) Cut Your Coat According to Your Cloth
Duncan Glassey an IFA with Wealthflow a company which specialises in 'life planning' insists that ultimately, you may need to resort to a spending plan within which you can live. "The majority of middleclass or wealthy people have spending problems, sometimes chronic enough to destroy their chances of having secure financial futures. So you are not alone!." The secret is to take a long hard look at your financial position and prioritise points of action.
4) First things First
Thomas Carlyle the famous Scottish author and historian said:'Our main business is not to see what lies dimly at a distance, but to do what lies clearly at hand.' This is a great maxim to follow when you are trying to get yourself back on track financially.
For instance there is no point paying off a low interest non-urgent debt when you may be paying 20% interest-plus on another debt that you have already defaulted on.
5) War on Plastic
Credit cards should come with a government health warning but instead we have for years been encouraged to load up more on the plastic and increase our credit limit as a matter4 of course. Although mortgage rates have fallen recently, credit card rates have not (circa 19% p/a), so your first priority is to pay off any outstanding credit card balances first.
6) Flexible Mortgages
If you have no credit cards or unsecured loans to pay off, you can instead switch your attention to your mortgage. Neil Mumford IFA with Milestone Wealth Management explains what the benefits are. "If you are in the position to take advantage of low mortgage rates, then pay down the mortgage. Not only will it save you money in the long term, you may just need to increase your mortgage in the future and a lower debt position makes you a more attractive borrower."
7) Family Business
Families, just like large companies have to balance the books, so treat yourself as if you are a small business, balancing expenditure against the income received. IFA Neil Mumford explains how the thought process should work. "Like a small business, the priority should be not to take on too much debt, ideally now is the time to repay debt rather than build it up. Invest for your long term future, savings now will reap dividends in the longer term. If necessary Seek professional advice to ensure that your well placed to beat the credit crunch.
8) Essential or Luxury
There is nothing wrong with paying for a few luxuries in life but sometimes you have to weigh up the costs. For instance three holidays in the Med each year might be a little excessive if it is all financed by the credit card which is groaning under the heavy usage. Three weeks relaxing in the sun might be followed by three months of anguish and trying to keep your finances afloat. It if looks like you might be a bit strapped for cash, establish what the essentials are and work out what money you have left after they have been accounted for.
9) Putting Pen To Paper
The only effective way to work out where you stand financially, is to sit down with pen and paper and work it out. To begin, you may wish to draw up a detailed list of your spending habits during the last six months. Based on what the numbers show, and what you think you want to achieve, you can then identify changes that will enable you to achieve your goals. Reviewing bank statements is relatively straightforward. It's the cash withdrawals that will inevitably require some detective work.
10) Deep Dark Truthful Mirror
The fight between saving and spending could be described as an epic saga. It tells us about ourselves and sometimes the findings are not what we want to hear. IFA Duncan Glassey believes we must reassess our priorities and rethink our spending philosophy. "Nobody really wants to say no to those little, and large, financial treats. It feels as if none of our friends or colleagues are ready to curtail their spending, so why should we? Nobody wants to be the first one without the trophies of success."