Last year was a seminal one for British households, but unfortunately for all the wrong reasons. After all, Brits spent around £900 more on average than they received incomes throughout 2017, pushing their finances into deficit for the first time since the credit boom of the 1980s.
This has left an army of UK consumers who are struggling manfully to control their debt mountain, which is crucial if they’re going to reduce this and achieve financial security in the future.
With this in mind, now may be the ideal time for individuals to take a more proactive approach and take control of their own financial future. Here are some steps to help you achieve this objective:
- Consider Opening a Managed Bank Account
If you’re financial problems have recently hit a new low, you may find it difficult to complete even the most basic credit transactions.
This can even include opening a bank account, as institutions are increasingly wary of engaging customers who have a chequered credit report and a history of struggling to repay debts.
To help negate this issue, you should consider opening a managed bank account from a reputable lender like Think Money. Through this type of arrangement, service providers will help you to manage your finances and control your spending directly, while ensuring all crucial bills are repaid on time.
Not only will help you to build your credit score incrementally over time, but it may also challenge your behaviour while teaching the basics of sound money management.
- Learn how to Budget and Utilise Credit
As your credit score improves, you may become eligible for standard bank accounts and even a selection of loans and similar products.
This will create a significant period of transition, and one that will require you to apply some of the skills that you’ve learned and understand how to fully utilise credit to your advantage.
One of the key skills that you’ll need to apply is budgeting, which demands that you calculate your incomings and outgoings and determine the precise amount of disposable income that you have each month.
In terms of credit, it’s imperative that you take out small but manageable lines of credit that can easily be repaid each month. This will create a positive history of credit transactions and boost your score considerably, so long as you operate responsibly and understand the impact of interest rates and APR.
- Adopt a Frugal Approach to Spending
The rate of disposable income in the UK has continued to fall in recent times, against the backdrop of rising inflation and stagnating wages.
This is a key contributor the financial issues facing households in the modern age, but fortunately it’s also one that can be managed with a frugal approach to spending.
The key here is to focus on reducing the cost of everyday items such as groceries and utilities, rather than big-ticket purchases. This way, you can make small but impactful lifestyle changes that deliver long-term returns, without compromising on the quality of your overall life.
This takes discipline and focus, of course, while you’ll need to adopt a frugal approach over a sustained period of time to generate results.
