It goes without saying that 2020 and 2021 have not been the best years due to the impact of the Covid-19 pandemic. Many, especially vulnerable families, might already be facing financial difficulties, with expectations of more challenging times beginning April 2022.
Now is a good time to take steps to take control of your finances. With that in mind, here are six tips to help you get on track.
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1. Review and understand your debts, expenses and income
It’s important to understand your incomings and outgoings to get a clear picture of how much you could save. If you have a number of debts, paying them off first, especially the costliest, makes a lot of sense before putting money aside.
It can get quite tricky trying to save money while struggling with debt. For peace of mind and to make it easier for you to save, aim to pay off your debts first, then see if you can put a significant amount aside as savings.
You might also consider consolidating your debts to save some money.
2. Save with a goal in mind
Having a goal motivates saving. A goal can be anything from buying a home or a car to going on an international trip. Something as simple as naming it can help you add meaning to the money you’re saving, which can eventually help you stick to a savings plan and build a saving habit.
3. Start an emergency fund
An emergency fund is different from saving money for a goal. This is the money you only withdraw when you have an emergency. A rule of thumb is that your emergency fund should be large enough to cover around three months’ worth of essential expenses. Start small, and don’t be discouraged if your fund doesn’t seem to be growing as fast as you want.
It’s advisable to save the money in an easy access saving account. It allows you to access the cash anytime, keeping in mind that emergencies aren’t predictable.
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4. Take advantage of savings initiatives or benefits
If you’re on a low income, check whether you’re eligible for the government’s Help to Save scheme. The scheme allows you to get a bonus of 50p for every £1 you save over four years.
You could also consider a Lifetime ISA. According to the gov.uk website, you can save up to £4,000 each year, until you’re 50. The government will then add a 25% bonus to your savings, up to a maximum of £1,000 per year.
5. Look out for credit or debit card offers
It’s not uncommon to find credit or debit card providers offering money-saving deals, especially if you purchase items with the cards. It doesn’t hurt to read the terms of these deals to find out how you can benefit. This includes travel credit cards and business credit cards.
6. Take advantage of government benefits
If you’re struggling financially or having difficulties saving, there could be benefits that you’re eligible for that you haven’t claimed. Browse through the benefits on offer, keeping in mind though that eligibility is based on your unique situation. Accessing benefits you’re eligible for could free up some money that you can put into savings or investments.
The post 6 tips to improve your savings skills as 2022 begins appeared first on The Motley Fool UK.
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