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More Budgeting Tips

In our latest instalment of a series of articles examining how we can budget and make what we earn go as far as possible, we focus more on debt. Here are some more budgeting tips. 

Pay Off High Interest Debt First

Or more to the point, the highest interest debt of all. This is logical that the debt that costs you the most money is eradicated first. Yet many people don’t even know what they are paying in debt. If that sounds like you then sit down and list all your debt. work out what it stands at and how much you pay back on it. And how much interest it costs you on top. Then rank your debts in order of priority. It will feel great to pay one-off. Set yourself individual goals with debts. If you can transfer debt to 0% cards, then all the better. 

More Budgeting Tips – Save For Retirement

Look, the fact is that many of us can simply not afford to save for the future. It is never more true than now, when many of us are simply trying to survive. But hopefully for most of us, things will improve. With that in mind, should you be able to, you should aim to put money aside for retirement. We reckon you should put 10-20% of earnings into a pension if possible. But any amount helps, to be honest. It’s another goal to aim towards, as few of us wish to be working into our 70’s, because we can’t afford not to. The more you put in, the longer your retirement. Remember, in the UK, if not self-employed, your employer must match your contributions, by law.

Other Things To Save For

After retirement, you should look to have savings that can cover you for the unexpected for at least 3 months, and preferably double that. And then if you have children, you will want to think about providing for them. This might mean paying for education, or when they get on the property ladder. 

More Budgeting Tips – Property

If purchasing a home yourself, look to put down at least 20% as a deposit. Some may have to do less, but it makes financial sense to take the edge off a purchase by not having to pay it all off, with interest. Every thousand pounds you put down as a deposit is a thousand pounds that will not attract interest rates in the coming years. If possible, do not purchase a home that costs more than 3 times the combined income of those involved in the purchase. You do not want the pressure of paying too much in mortgage payments each month. This is especially true considering all the extra costs involved in a home.

Finally, if interest rates drop by 1% or more, consider refinancing your home. This comes with costs, but may be worth it due to lower monthly payments.

Random Observations

If purchasing a car, it is not considered sound financial sense to buy a new vehicle, as they lose value quickly. Better to buy one that is a couple of years old, as you get better value for money. Do not buy a vehicle beyond your means. You should not be putting down more than 10% of your earnings each month to pay for a vehicle. Again, putting down a deposit will help. With all other costs, at the very most vehicle costs should not be greater than 20% of your earnings. This depends very much on its importance in your daily life. 



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