Summer’s here – no really it is. It’s the prime time to reflect, perfect and generally get everything in shape.
But I’m not talking about getting that bikini body you’ve always wanted.
And I don’t mean trimming those additional ‘curves’ you got after getting through too much booze on your two week break in the Costas.
Oh no, I mean giving your dosh (and the excess pounds it’s carrying) a thorough work out.
Got any unsightly bumps and lumps to smooth out? Want to get your money working better, so you can ultimately work less? Want to free yourself from financial stress, struggle and uncertainty?
If you (and your money) are feeling decidedly sluggish, it’s time to get active. Here’s a three part action plan that could ultimately help to give you financial freedom.
Step 1 – Work that booty
Think Jane Fonda. Remember her?
Well, before Davina McCall got the nation working up a sweat and way before the arrival of the Essexercise workout, from TOWIE’s cosmetically-enhanced, perma-tanned girls, JF was the woman who sparked a rash of Tuesday night aerobics classes.
Back in the 70s thousands of middle-aged women kitted out in towelling track suits (in the days before Juicy Couture made towelling cutting edge too, remember) dutifully flocked together once a week to lose those excess pounds.
The 21st century workout has moved on a little, and today the trick is keeping tabs on everything from your credit cards to your ISA account, simultaneously.
So start with a quick warm-up and then let’s begin.
Step 2 – Trim the fat
Let’s tackle the main problem areas.
Your mortgage
Remember the palaver when you were taking out a mortgage? All the endless research you did in order to decide which lender was better, whether you should plump for a fixed rate or opt for a tracker, and how you’d deal with a 0.25%, 0.5% or 0.75% interest rate hike.
Well, you might breath a sigh of relief now those days are over, but the thing is, you shouldn’t turn your back on the whole world of mortgages – especially not now that you’ve taken on what will most probably be the biggest financial burden of your life.
It might be a chore, but regularly reviewing your home loan is crucial. If you can trim a grand or so off your mortgage payments, you’ll see it is time very well spent.
Your other borrowing
Use a loan calculator to see whether you could switch lender and save money. Be careful though, loans don’t tend to be very portable.
It makes sense – the lender doesn’t want you to wander off to a cheaper rival the minute they spring up. So they keep you ‘loyal’ by slapping on early redemption penalties.
Your pension plans
An easy rule of thumb (or so the experts say) is to plan to have the equivalent of 70% to 90% of your current income to hand when you give up work.
The idea is to think of this as the annual ‘cost’ of retirement. However, beware rules of thumb as they can be a bit like those tops that say ‘one size fits all’ (i.e. a myth). So plan carefully.
And you might not want to be thinking about your ‘twilight years’ already, but planning ahead never hurts.
Your savings
Savings must not be overlooked, as they can be a primary source of income. The key is to start setting something aside – as much and as often as you can – and as soon as possible. But these sorts of investments do need regular reviewing, so make sure you stay on the ball.
Start by working out how much you can afford to save and then pick the most suitable method for you.
Don’t forget options like funds and premium bonds, in addition to savings and notice accounts, too.
Step 3 – Stay in shape
- Periodically review your spending habits.
- Monitor the performance of your investments and make adjustments when necessary. Don’t stick with a dud for the hell of it.
- Keep the level of your savings in line with your income. If you can save more, do so. If you’re earning less and overstretching yourself, then stop.
- Spend some time every once in a while reviewing your financial situation. Check that your credit card, current account etc. is the best for your needs. If it’s not find a better one.
- Keep on top of your outgoings. Find out for sure just how much you spend on going out, eating in, travelling abroad or nest-building.
