Managing Your Cash Flow
How to make your money work for you
6 min read
15 November 2019
Money can work for you or it can work against you. Here are five steps towards getting it right.
From the moment we’re all born, we’re taught to be consumers rather than financial planners. So, it’s no wonder why over 50% of Brits cannot afford a £300 emergency expense.
But this no longer needs to be your situation. If you want to make money work for you, then you need to be wise in what you spend your money on.
Do not take on too much debt and try to invest your money wisely. Of course, this is easier said than done, but it is surely possible if you know what you’re doing.
Below are the top 5 simple ways to make your money work for you in a variety of situations.
1) Eliminate all debt quickly
If you’re already burdened with existing debt, such as credit card debt and personal loans, then you need to eliminate this debt as quickly as possible.
Whenever you borrow money, you’re ultimately losing money because of the interest payments which get added onto it.
You should only borrow money if it is for an investment which makes you a quick return, but that is very rare. To get out of debt fast, you need to apply for an Individual Voluntary Arrangement.
Why an IVA?
With an IVA, you can consolidate your debt and eliminate your future interest payments. Then you’re left with one low monthly payment instead of several monthly payments.
Just keep making that one payment on-time, and it’ll improve your credit rating and financial reputation. Make sure you review the IVA criteria carefully because not everyone is eligible for this arrangement.
You must have at least £5000 worth of debt, United Kingdom resident status, a recurring income, and at least 2 creditors or companies that you owe money to.
The same concept applies to all the countries of the United Kingdom, whether you need an IVA in Scotland or England.
2) Get advice before dealing with debt collectors
When you’ve missed too many payments on an owed debt, you will likely be contacted by debt collectors. Bristow and Sutor are the common debt collectors you’ll be dealing with in the United Kingdom.
They’ll usually come to your home and try to collect debt payments in person.
However, you must know your rights because you’re not obligated to hand them money on the spot. You also need to make sure they’re legitimate bailiffs. Before dealing with them, contact an agency for advice and guidance on your rights when dealing with debt collectors like them.
3) Get a secured loan
If there is an emergency and you must take out a loan, then go with a secured loan only. The advantage of a secured loan is that you don’t need good credit to get approved for one. You can put up your house as collateral if you’re a homeowner. The lender may even give you a low fixed interest rate and low monthly payments.
That way, it makes paying back the loan much more affordable for you. However, if you ever end up in a bad financial situation where you cannot make your payments, then you could potentially lose your house. So, only use a secured loan if you know you can pay it back.
4) Get a funeral plan together
Are you wondering, what is a funeral plan? It is basically a prepaid funeral where you pay for all the funeral services that you want ahead of time. That takes the financial and emotional burden off your family members because they won’t need to deal with the funeral arrangements or negotiate money with the funeral director.
All they need to do is call them up to notify them of your passing, and everything else will be arranged at no charge to them. Funeral plans usually offer better funeral packages and deals.
You can get a cheap deal on your coffin, hearse, undertaker services, crematorium services, funeral director expenses, and ceremonial services. That is a great way to make your money work for you after you’ve passed away.
It takes care of your family’s financial worries, and it allows you to do one last good thing for yourself.
5) Find a financial advisor
Once you’ve finally cleared out all your debt and saved up some money, the next thing you’ll want to do is find a financial advisor.
They can guide you on the best ways to invest your money in something with a good financial return, such as IRAs, pension plans, index funds, and so on.
Building wealth is what you want to do after you eliminate debt. Then you’ll never end up needing to borrow money ever again.