We need to stop sticking our head in the sand when it comes to our money. So here are the absolute fundamentals of managing your finances when you quite honestly don’t want to.
Have these 5 fundamental accounts
- Main current account: that you’re reviewing on an annual basis
- Quick-access savings account: to keep your emergency fund. Whether you get a debit card for this is up to you – if you need it for on-the-go emergencies, or to stop yourself from using it on a night out is up to you….
- Long term stocks & shares ISA: where hopefully 10-15% of your savings are allocated
- Sinking funds account: whether you seperate these into a different bank or create pots within Monzo, I would reccomend separating this from your current account to limit your access to them
- Credit card: that either earns you flight points, cashback, money off insurance – whatever the case, make sure you’re reviewing this annually too and that you have a credit card sinking fund to match it. This account is ONLY for the rewards you’d get from spending on the actual credit card, not for borrowing money!!!
Have an actual budget, and review it regularly
I know this is a very obvious one, but this is the actual content of what you need to manage. I would literally not be able to make this article without mentioning a budget.
I used to literally never even check my bank account balance. I would kind of try to not overspend, and there were definitely times I got texts from my bank letting me know I’d used up too much of my overdraft. That was usually my red flag to sort myself out.. however this would only last until the next payday.
But because I wasn’t checking my balance, or keeping a record of what I earned versus what I spent, I literally had no clue what I was good at doing versus what I was bad at doing.
12 months on from taking the routine of budgeting seriously, I now know that my kryptonite was spending just £10-£20 here or there. Doing this multiple times a week adds up, especially when you have bills and financial commitments that you can’t skip—like rent, car payments and utility bills.
Because of this, I knew what I had to do to then work toward a positive bank balance. It was such a simple first step that I avoided for so long because I was simply scared of the truth: that I was a bad spender.
Carve out time for checking in on your finances
I do the same thing for cleaning my flat, threading my moustache (we all do it!) and working out. If you don’t make time for it, it will never get done. You will always have an excuse: you’ll do it tomorrow, or on the 17th August 2028 when you’re free for 17 mins. Nope.
I have a recurring event in my calendar for the last day of every month to not only check my budget, but also review elements of it. How much closer am I to the ultimate holiday sinking fund? Can I stop making payments into my emergency fund now? Did I clear all the credit card debt from last month? Is every penny that’s spare this month doing something useful for me?
Personally, every month I evaluate whether I can afford to increase the standing order into my investments. Right now, I’m increasing my crypto contributions by £20 every month. So the end of the month is a little exciting!
Review credit card + current account offerings and ensure you’re getting the maximum possible cash-back
Part of managing my finances is 100% reviewing which credit cards and current accounts are best out there at-least once a year. This is something that’s really forgettable and ALSO one of those things that’s really easy to put off… so schedule it into your calendar!
Invite your friends to the calendar event to keep you accountable! Post about the review on social media! Just make sure you’re doing it – nobody but you loses out if you don’t.
Why do I care about credit cards when I advocate for having no debt? Because good debt puts you so much closer to longer term goals. An example of using debt wisely: having a credit card that gives you cash-back on your food shop, that you clear in full every month.
Not only are you earning cash on spending that’s necessary, you’re building up good credit. And good credit rewards you in SO many ways… from getting a mortgage later in life to being able to get even better, more rewarding credit cards and bank accounts.
I stay on top of my credit rating and make sure I never take out unnecessary financing
As I said earlier, good credit is invaluable in life. It opens doors you may not think you need. You never want your credit rating to be the the dark horse that disadvantages you in any situation: from getting a rewarding current account to getting a mortgage on your first home.
To avoid this, I contribute to sinking funds specifically for small amounts frivolous spending. Of course I check myself on the amount of frivolous spending I do, but I never want to rely on borrowed money for this. So if I ever use my credit card for something I haven’t necessarily planned, I know I can pay it off using a sinking fund.
Make sinking funds for every and any aspect of your life!