There are certain things we know we should be able to do with our finances: we should have our borrowing under control; we should have an emergency safety net; and we should be able to plan for the future. Sadly, sometimes these things are easier said than done.
Fortunately there are ten steps you can take which will make all the difference in reaching your financial goals.
We've teamed up with NatWest to offer ten tips on reaching your financial goals.
1. Set your goals
You're likely to have all sorts of things nagging away at you: you might not know exactly what debts you have - or how much interest you are paying on them; you may be worried about a looming expense - if for example your car is on its last legs. Don't leave this as a jumble of concerns - write down what you want to achieve.
2. Start with your debts
Some of your plans will necessarily be long term, but others can be started today. Debts are a great place to start. Dig out the paperwork, and work out everything you owe. Also look at the interest rate and charges on your debts. NatWest prides itself on having products with no hidden charges, but not every bank is so straightforward, so examine what you are actually paying and not just what you think you are.
Now consider the best ways to borrow that money. Is it a long term debt that should be paid off through a personal loan? Is it a smaller amount, that could go on a low interest credit card while you pay it down? Decide what's right for you.
The NatWest Clear Rate credit card charges a low 6.9% p.a. (variable) on purchases and balance transfers, no balance transfer fees, just a simple annual fee of £24, which helps you see clearly exactly where you stand. The card isn't designed with attention-grabbing introductory offers, so there are no nasty surprises when a 0% period runs out and no need to move around to avoid higher charges after a 0% period. You'll need to factor in the cost of the fee.
Representative example: Representative 11.1% APR (variable) based on an assumed Credit Limit of £1,200. Standard interest rate for purchases: 6.9% (variable). Annual fee: £24.
Your actual credit limit and the interest rates you receive will depend on our credit assessment of you and the interest rate could be up to 14.9% p.a. (variable). The APR you'll receive will be based on your interest rate and credit limit and will take in to account the annual fee, so may be higher than Representative 11.1% APR (variable) which also takes into account the annual fee. Interest on fees and charges is payable in line with our terms and conditions. Balance transfers are limited to 95% of your available credit limit
4. Think about your short-term goals
One of your short-term goals may simply be to have the money in place if an emergency arises. It's definitely a great idea to start saving for this as soon as possible. In the interim, it's also worth having a plan B in place, just in case the emergency hits before you have the savings ready. It may be worth having a credit card set up, for example, so you don't need to fall back on more expensive forms of borrowing if something goes awry.
5. Consider the longer term goals
Beyond the immediate issues, we all have longer term financial goals. Once you have your debts under control you can look ahead and decide what you need to save - and roughly when you will need the money. Once you know this, you can decide how much you need to set aside for it. The best approach is a savings calculator, which will factor in interest for you. If you bank online with NatWest you can make use of its excellent savings goal tool. This will determine what you need to put aside each month.
6. Find the extra cash in your budget
Unless you regularly find yourself with money left over at the end of the month, you cannot just put money aside or you'll run into problems with your monthly budget. Your best bet is to use a budgeting tool like the one offered by NatWest which lets you input everything you earn, and all your regular outgoings, in order to see what you are spending, and what you have left to save.
If there's nothing spare to save, you need to think about where you can cut back in order to find the cash for savings. Can you shop around for utilities, phone, and media packages in order to pay less each month? Are there things you are wasting money on that you're seeing little benefit from - like gym membership or subscriptions? Do you need to make some lifestyle sacrifices such as one fewer takeaway a month, or spending less on fashion? Or are there bigger changes you can make in order to reduce costs - such as where you choose to live?
7. Find an alternative solution
There will be people who go through this process and conclude that they don't have the money for savings. However, there are alternative approaches. You need to consider the income side of the equation too, so can you claim more benefits, work more jobs, or sell off some of the valuables you have no need for? If all this work frees up some money in the budget but not as much as you need, the answer is to re-think your goals. You either need to save for longer, or lower your target.
8. Find the right home for your savings
You need a savings vehicle that suits you. In most cases this means the best possible interest rate - with the terms and conditions that meet your needs. You might, for example, need to easily get to your emergency fund, so you need an instant access account. Alternatively you might want to put money away regularly and withdraw it infrequently, in which case a regular savings account could work. You need to consider what you will need to be able to do with the money, and then find the best available rate within those parameters.
A separate account for each savings pot will allow you to see exactly how you are doing in hitting your savings goals. It will also establish a bit of a barrier to stop you dipping into savings to cover the cost of something else.
9. Save before you can spend it
It's worth setting up a standing order to come out of your account the day after you are paid. This will mean in most cases the money disappears before you have a chance to register that it was ever there - let alone before you have a chance to spend it. This will help reinforce the idea that this money is no longer part of the cash you have available for everyday spending.
10. Keep on planning
Each time you revisit your financial goals, you need to think about whether you priorities have changed, and whether any ideas have emerged which should take priority or which need to become new goals. So, for example, while someone in their 20s may want to focus on repaying student debt and setting up a deposit for their own home, once they have made a start with this, they should be thinking about more long-term savings too - like saving for a pension. You can have any number of goals running concurrently, so take the time every six months to consider the bigger picture, so you know you are directing your efforts to hit the financial goals that really matter in life.
To apply for the NatWest Clear Rate credit card need to be aged 18 or over, a UK resident and earn at least £10,000.
Visit NatWest for further details.