With the impact of COVID-19 influencing the global economy, it is no surprise that personal finance is on a lot of people’s minds. With many people already dealing with the impact of COVID-19 and others that are concerned about future job security, personal finance is definitely a point of discussion at the moment.
As well as this, from a more positive perspective, national lockdowns have certainly given people the opportunity to reflect on their employment commitments and made many wish for a future where they do not need to go into work every day and value other aspects of life balance.
However, many still wonder how you take the first steps to effectively manage your personal finances and achieve your financial goals?
This is a question that is even more significant for women. Despite huge progress in women’s ownership of global wealth, with a recent report by BCG finding that 32% of world wealth is now in the hands of women, the crisis impact is still far more likely to impact women than men. In fact, rather alarmingly, “women make up 39% of global employment but account for 54% of overall job losses due to COVID-19.”
So how can we better manage our personal finances to effectively equip us for the road ahead? Here are five easy to implement stepping stones to take control of your personal finances.
Make a Start
This may seem like a very straight forward suggestion, however, it is extremely easy to ignore your spending habits or remain in your current routine out of ease. Who can blame you? Nobody really wants to be researching benefits of a current account in their spare time!
Allocate a specific date and time in your calendar to understand the basics of the world of finance. This will help ensure you don’t avoid the task. This could be as simple as reading up on the benefits of different banks and what they offer to their customers, or if you are looking to expand your knowledge further, reviewing investment options in a stocks or shares account.
This provides a good time to reflect on your financial goals. Start by thinking about your short-term goals before moving on to your end goal. It is important to remember that there is no right or wrong goal; it could be as simple as to spend less on coffee per week or as ambitious as becoming financially free in the next few years. It is personal to you, so try to avoid comparing yourself to others.
Plan a Budget
Whatever your financial goal is, it is always better to have a plan. Like many things in life – “fail to plan, plan to fail!” Review your bank statements regularly to establish what money you currently receive and how you spend it. You will probably be surprised with how quickly little purchases add up.
Once you understand where your money is coming from and where it is going, you can create a plan on how you would like to manage it moving forward.
Create an Excel sheet with clear budgets. Consider your expenditures critically. What is necessary spending? What is indulgent spending?
Remember to be realistic with your budget plan – it is much better to be more lenient and able to stick to it than set out with great intentions but give up after a week because you realize you can only afford to eat beans on toast!
Use the Digital World to Your Advantage
The digital world is often blamed for our increasingly impulsive spending habits, and increased use of cards and contactless payments during COVID-19 has meant you don’t have to have cash in your pocket to spend it! However, use the digital world to your advantage.
Online banking and financial savvy apps have given us the ability to closely track where we are spending. In fact, many online bank accounts can automatically divide your expenditures into different categories, as well as sending your mobile phone a notification every time you spend, so tracking has never been easier.
As well as this, apps and online platforms have simplified access to investment or money-making opportunities.
Some considerations may be:
- Trading
- Selling unwanted items online instead of throwing them away
- Selling services online
- Accessing professional finance and investment advice free of charge
However, always remember it is important to closely evaluate and research any investment opportunity before disclosing personal details or investing funds.
Shop Around
We are certainly creatures of habit, so it is very easy for us to fall into the routine of ‘accepting’ what we pay for a product or service. As part of your financial planning or budget, review what you currently spend to access particular products or services.
Compare what you are currently paying to other providers on the market. There are lots of useful comparison sites available now, so you can quickly compare your quote to hundreds of other providers to ensure you are getting the best deal.
Services that may be good to review are:
- Insurance (health, home, pet, car)
- Utilities providers (gas, electricity)
- Phone and broadband providers
- Gym or activity subscriptions
- Music or app subscriptions
- Flight/travel providers
When shopping on the High Street, compare supermarket prices. Shopping once a week and planning meals in advance saves wasting food and costs less than shopping in convenience stores. It has added benefits of leading to healthier eating habits and is better for the environment.
Use the same scrutiny for buying other items. For example, instead of buying a piece of clothing in-store, could you purchase it online for a more competitive price? You will be surprised how much you can save just from bargain hunting!
Seek Professional Advice and Guidance
Still feeling stuck? There is a tremendous amount of online advice and resources to assist in making the most of your money, so have a dig around. There are also organizations and individuals with years of experience specializing in personal finance who can offer bespoke advice on your financial situation. Always be sure to check their credentials and references before engaging a financial advisor!
Finally, with unprecedented financial times ahead, whatever your goals may be, be sure to act today to maximize the potential of your personal finances.
Elizabeth Mills
Elizabeth Mills is Managing Director at BYT Enterprises Ltd, an education and training company, and co-founder of the William Mills Foundation, a charity providing opportunity for young people. Elizabeth was awarded ‘Women of the Future’ 2019 for her contributions to UK business. Under her leadership, her company was also awarded the ‘Job Crowd’s’ awards ‘Top graduate and early careers employer’ in 2019/20. Elizabeth graduated from the London School of Economics as a ‘Bottriell scholar’ with a qualifying law degree. Since graduation, she has held various senior roles in business and is currently responsible for the operation and success of a multi-site company in the UK. Elizabeth is passionate about supporting other women in business and leadership.
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