Life can be difficult enough without the additional stress of money worries. Taking steps to organise your finances can help you feel more secure, allowing you to focus on the countless other things life throws at you. Here are five tips for financial peace of mind.
1. Save cash – unless you have debts
It’s good to know that you have a pot of cash to fall back on if times get hard, so as soon as you are able to put a little away every month, place it into a separate account.
Interest rates on savings are poor at the moment, so if you also have debts it’s a good idea to pay these off before you start putting cash away.
APR on a credit card can be 20% or more, but even the best ISAs are only offering around 2% AER so you’ll always pay out considerably more money in interest on debts than you’ll earn in savings.
2. Manage debt carefully – fast cash isn’t always your best bet
The best advice when it comes to debt is don’t take on more than you can afford, and pay it off as soon as you can.
In some respects the credit crunch has done us a favour, as it is much more difficult to obtain some forms of credit than it once was. On the other hand, the financial climate is responsible for the uprising of short-term lenders – which could cost you hundreds of times the original amount if they are not paid back on time.
Before you say yes to a loan or credit agreement, make sure you read the small print. A loan with an APR of 2000% is rarely a good idea, especially if you are unable to pay it back on time.
3. Contents insurance – read the small print
Make sure your most precious possessions can be replaced in the event of loss, damage or theft – especially when it comes to items you need to make a living, such as your laptop or phone.
Contents insurance covers lots of items in your home, but once again it is vital that you read the small print. You might require extra insurance for very expensive items like musical instruments, or your policy might not cover anything stored in outbuildings.
4. Pay into a pension – and regularly check your investment
Start paying into a pension as soon as you can; the more you save now, the more comfortable you’ll be in later life.
If you are already paying into a pension, regularly check its performance and seek expert advice if you think it could do better.
There might be other options available. If you’re ready to take your pension, don’t take the first annuity offered; take time to assess your options as this will dictate your income for the rest of your life.
5. Life insurance – protect your loved ones
A good life insurance policy will pay out when you or your partner passes away, protecting anyone who depends upon your salary. In general, a life insurance policy will enable your loved ones to pay the mortgage, but it can also cover debts, education and more.
Money makes the world go round, so making sure you have your finances in order allows you to enjoy your life with minimal worry.
This post was written by the content team at Total Peace Of Minds Insurance. Make sure you check them out on twitter (@TPOMInsurance)