How to organise your finances for the long term

Money isn’t everything, but it’s certainly important. It lets you live the lifestyle you want, helps you build for the future and gives you choices. If you don’t feel in control of your finances or are looking to be better with money, here are the fundamentals to start with.

Create a budget that works for you

There are so many budgeting methods and principles out there. But discovering what works best for you is essential. Without clear monthly budgets, it’s hard to get a good look at your finances, what’s going where and what’s left over.

Play around with different approaches. This can include where and how you budget your money, and how you allocate your funds each month. To start with, list your monthly outgoings and total your income. Then have some fun with it – there’s no right or wrong way to do it.

Spend less than you earn

For long-term financial success, you need to have money spare each month. This demands that you spend less than you earn, also known as living within your means. If this isn’t the case already, look at your list of outgoings and see what you can do to reduce it.

Big changes like finding somewhere cheaper to rent or reducing how much you drive can make significant changes. But there’s lots of value to be had with little improvements like cancelling unused subscriptions and memberships. Even being more careful with your weekly shop can be powerful.

Clear debt and stay out of it

With money spare each month, you can start to do things that will benefit the future you. Clearing debt should always be the first port of call. The longer it’s unpaid, the more it will cost you – particularly if it’s subject to a high interest rate.

Start paying off debts with your spare income. Even if it takes a while, you’ll have a better foundation to build your financial future. Once you’re out of debt, stay out. Find ways to reduce your reliance on credit, whether that’s credit card spending, personal loans or anything else.

Save and invest for the future

With low or no debt, your attention should turn to saving and investing. Saving should be for the short to medium term – think big purchases like cars, holidays, weddings and rainy day funds. Investing allows your money to work for you over the long term.

Finding the right accounts, apps and tools is key. Saving spaces come in all forms, from easy-access accounts to Lifetime ISAs (LISA). Investing can take place on comprehensive trading platforms like Tradu, through your own investments in property and via other third parties. You’ll need to consider your financial goals, return on investment rates and your attitude to risk.

These are some of the fundamental factors to consider if you’re looking to organise and manage your finances effectively – both in the short and long term. Be patient and the right things will start to happen.

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