Personal finance management is all about taking care of your finances wisely, evaluating your financial priorities, and taking action on your financial goals.
London is considered as one of the world’s leading financial cities, with its leading financial institutions, strategic location, stable political system, first-class infrastructure, communications, and commercial systems.
As the UK capital and capital city of England, London is also the seat of the reputed London Stock Exchange, the second-largest stock exchange in the whole of Europe.
However, the burning question: how high is the financial literacy of the average Londoner?
The Financial Conduct Authority reported that millions of citizens in the UK, particularly in London are financially illiterate.
In a separate report, the London Assembly’s Budget and Performance Committee revealed that 25% of its survey respondents admitted to having no savings at all and that 73% of Londoners are not aware of how much they need for their retirement, and no idea as well of their tax advantages for their pension contributions.
That’s a huge paradox, really.
We have come up with a few suggestions and advice for every Londoner and for everyone who may need some help regarding financial literacy and managing their personal finance.
Tip #1: Make Savings As Part Of Your Monthly Budget
We’re all aware of the word ‘budget’ and almost everyone has a budget, but not everyone sticks to it. We know budgets are very crucial as they help us make better financial decisions and save more money on a regular basis.
Saving money as our monthly priority sets our discipline to make savings, and making saving a habit will be beneficial for us in the long run. Yes, we are aware as well that tomorrow is never promised, and we should always be prepared for any situation that may happen in the future.
With even just a few thousand saved in the bank monthly, you will feel a lot more comfortable with your financial status.
Tip #2: Be Insured, On Top Of Your Company Policy
Insurance is a necessity in today’s world.
Whether you are rich or poor, living in an affluent place or a dangerous one, you need to be insured for your health, your home, and your car. Yet, many do not even consider buying life insurance.
When you are insured, the insurance company will help pay for costs that you cannot afford. When your car hits another driver or person’s property. You will also be covered if someone decides to sue you for damages they believe were done by your actions. And when something happens to you, insurance functions as an income replacement for your family.
Even if your company provides you group insurance, this can be taken away from you as soon as you leave the company, or when you retire. Your company insurance is only good while you’re working in the company. So it is best to invest in your own personally paid insurance.
Surely, being insured can save you a lot of money in the long run.
Tip #3: Prepare Your Emergency Fund
“Life happens when you are busy making other plans”, says an old saying, and that is so true. While unexpected things may go wrong and happen before we expect it, it is wise to have a financial plan in place before any of them occur. One of the most important parts of your financial plan should be an emergency fund.
Why have an emergency fund?
One of the most important reasons for having an emergency fund is because it prevents you from going into debt in case something unexpected happens. And this could be anything from a flood to a health issue. You don’t want to end up using credit cards or borrowing money from family members, because of an emergency issue that you are not ready for.
Tip #4: Manage Your Credit Card Wisely
Credit cards are powerful. If you’re a good payer, it helps you build up your credit, save for your future, and gain lots of rewards in the process.
How do you effectively manage that “magic plastic” so it serves you well?
If you have a credit card, there’s no need to cancel it. People say that credit cards are evil, but they’re actually not. It’s excessive debt that is bad. Don’t cut up your cards unless you have a spending problem and need to get back under control before things get out of hand. Discipline yourself to pay when the credit is due, in that way you wisely avoid the charges!
Tip #5: Make Your Shopping and Grocery List, Avoid Impulse Buying
Are you among the guilty ones going around the grocery in circles, while thinking of what things you need for the kitchen, for the home, and for your kids?
Without a grocery list or shopping list, you come home from the store with so many unnecessary items due to impulse buying. And you end up saying to yourself: “Why did I buy this in the first place?”
Sometimes this poses no problem, but when it comes to food items or other things that you need for everyday living, impulse buying can be problematic.
By pre-planning with your shopping list before heading to the store, you can avoid the most common traps that lead to these purchases by making sure that you only allow yourself to purchase only the things you need, keeping your expenses manageable.
Tip #6 Create Your Financial Vision Board
Have you created your financial vision board?
These are simple and fun tools that we can use to achieve our goals and live the life we want, helping us visualize our dreams, creating a visual pathway for us to achieve them easier.
Celebrities such as the likes of Oprah, Lisa Nichols, and even Jim Carrey created their financial vision boards, and look where they are today!
Some people like to make vision boards with pictures; others make them with words; some people mix them up with pictures, words, and lots of artsy stuff, depending on what you fancy. The important thing is that you actually spend time every day picturing your dream life and then taking action towards making it happen.
Tip #7 Invest In Healthcare For The Long-Term
You ask yourself why you need to invest in your healthcare for the long term.
And why not? Some healthcare advocates say that if you’re immortal, if you will never get sick, if you’re like Superman or Superwoman who is always alive and kicking and never fall prey to the villains’ snares, then you don’t need healthcare protection.
Of course, they’re kidding. Everyone needs healthcare especially for their old age, for their twilight years when they’re old and grey and will need their healthcare to take care of their needs. We all will get old, we move closer to our elderly years each day, and it is wise to prepare for our retirement years, while we can.
There you go!
Whether you’re a new or experienced investor, there is always more to learn. We’ve put together a handful of tips on personal finance that every person should know, which you can check out to help you start building your wealth and keep improving your financial future. And yes, you are free to do your own research to learn more about managing your finances!
We’re also hoping that our advice would be able to help you avoid making some of the most common mistakes when it comes to personal finance – check out more financial tips as London X City discuss London finance. Now is the time to get serious about your finances and begin working on a plan that will keep you in control, while also leaving room for some fun!