How to fix your personal finances in 2024

By understanding where your money and debts are, you can make a plan for savings, paying off debts and stretching your money to go further.

10:03 08 February 2024

With the cost of living crisis still in full swing, getting a handle on your finances has never been so important. By understanding where your money and debts are, you can make a plan for savings, paying off debts and stretching your money to go further. 

Here are some tips to help you get control over your money. 

Debt clearance

Debt is a common problem for UK households. In September 2023, UK households owed £65,724 on average which added up to a national debt of £1,846.5 billion by the end of October 2023. 

Debts can take a toll on your mental health, so it is important that you start to tackle it as ignoring it will only make it seem harder to deal with as well as potentially adding on interest. 

To begin, make a list of all your debts and the amounts that are owed. This will allow you to see everything clearly. Then you should work out the payments for each of them and whether you can afford them. It is important that you keep in contact with your creditors so you can work together and create a plan to get things repaid. 

Improving your credit score

A credit score is a number which indicates to lenders how reliable you are when it comes to borrowing money. If you have struggled in the past or missed a payment accidentally, your credit score will have taken a hit. This can mean it is hard for you to get credit of any form such as a loan or even a mobile phone contract. It can also harm your chances of becoming a renter or homeowner. 

There are ways to improve your credit score. One option is taking out bad credit loans which are designed for people who struggle to obtain loans due to their credit history and can help prove that you are now a responsible borrower.

Budgeting

To really get a grip on your financial situation, create a budget. Budgets should be realistic, and they can help to highlight areas where you could cut back. 

Start by noting your bills and regular outgoing payments against your income. You should include any loan repayments in this as well, so you don’t forget about them.

Once you have done this, you will be able to see if there is any money left at the end of the month. This can be used for fun activities, or you can start a savings pot. You may even be able to identify any subscriptions or regular payments for things you don’t use any more and cancel them. This equals instant savings or the ability to create a fun pot so you can go out and enjoy yourself! 

Just remember to stick to your budget and prevent yourself from overspending and getting yourself back into a bad financial position.