How to boost your financial wellbeing on National Financial Awareness Day

• To celebrate National Financial Awareness Day on 14^th August, experts at Novuna Personal Finance share their top tips on how you can get your finances back on track
• Searches for ‘managing money’ have increased by 4.6% this year, while there’s been a whopping 31% increase YOY of those searching to ‘borrow money’– unsurprising given recent cost of living challenges
• With the recent cut in interest rates, the UK economy is showing early signs of bouncing back and money-savvy Brits are seizing the opportunity to take control of their finances

Summer months typically lead to a spike in spending, with the perfect combination of warm weather and school holidays encouraging Brits to get out and about.

Increased spending often brings with it increased financial pressures though, particularly for those already struggling to manage their budgets.

That’s why, to celebrate National Financial Awareness Day, personal finance specialists Novuna Personal Finance are offering up their tips to help people manage their finances more effectively.

1.   Understand your spending habits

Working out where the bulk of your money goes each month is key to figuring out where you could make some positive changes to your spending habits.

Start by listing out your income and expenditure, potentially categorising your spending into essential and non-essential, so you can more easily spot areas where you splash out the most. You might even discover one or two simple ways to cut back, such as old subscriptions you forgot to cancel. It’s also worth making sure you’re not paying for things you already have covered. For example, some current accounts come with additional benefits such as insurance or breakdown recovery so you may find you’re actually paying twice for a product you don’t need.

From here, you can see how much disposable cash you have left over to achieve your goals. If you decide to borrow money, this can help you work out how much you can afford to repay each month. You can then use a tool such as Novuna’s online loan calculator to get an idea of how much a loan could cost.

2.   Set your goals

Most of us will know that it’s recommended to follow the 50/30/20 budget rule (50% of your salary allocated to essential expenses, 30% spent on non-essentials and 20% going towards your savings).

However, you’ll be far more motivated to adjust your spending habits and reach your savings goals if you have something specific to work towards. People may have been understandably tentative to set ambitious goals but, as the UK economy shows signs of recovery, we’re seeing consumers start to feel more confident about parting with their cash.

Why not share your goals with friends or family so they can encourage and support you? For example, they might suggest a movie night at home rather than a pricey trip to the cinema if they know you’re trying to stick to a budget.

3.  Decide whether to save, spend or borrow

Next, ask yourself how quickly you want to achieve your goals. This can help you to decide whether you want to save up slowly over time or borrow the money you need to help you achieve your goal sooner. Borrowing money will almost always cost you more in total though, so consider all your options carefully. That said, with the Bank of England interest rate recently lowered to 5%, it’s likely that lenders may begin to follow suit – making borrowing less expensive than it has been over recent years.

If you do decide that borrowing money is the right decision for you, always choose a reputable, Financial Conduct Authority (FCA)-regulated lender and take a close look at the lender’s online reviews.

Bear in mind that most lenders have an APR-based tier system, with much smaller loans typically carrying a higher APR while larger loans have lower interest rates. That’s because all loans have certain fixed costs associated with them, and smaller loans generate fewer earnings to cover those costs.

Look carefully at the Interest rates a lender is charging across different loan bands and loan terms, to decide which one is best for you.  Specifically look at the total repayment of the loan over the term as you may find that borrowing slightly more over a longer period is more affordable and gives you the flexibility to achieve what you want sooner.

And check out the eligibility criteria  before applying to give yourself the best chance of being accepted.

4.   Spend mindfully

We often tell ourselves we need something when, truthfully, we don’t.

There’s nothing wrong with setting aside some cash each month for non-essential purchases – as long as you’re not going over budget. To help avoid impulse spending, wait at least 24 hours before making the purchase. You might be surprised how often the spending itch subsides after a few days! With many online retailers offering automatic discounts on items you’ve looked at recently but not purchased, this might also help you save some extra cash here and there, so it can pay to wait.

5.  Practice good money management

A key part of reviewing your finances is also checking over your credit report which contains all the information on any credit you’ve had in the last six years (you can get a free copy from each of the main credit reference agencies).

Your credit report provides a good overview of how you’ve managed debt in the past, and lenders often use this information to make a decision on credit applications, so it’s important to make sure it’s up to date and free from any errors before applying for finance – even something as small as a typo can have an impact on your application, whereas other inaccuracies could be an indication of fraud and need investigating as soon as possible.

To improve your credit score, make sure you’ve registered on the electoral roll, have some regular payments such as a mobile phone contract or utility bills coming out to demonstrate financial stability, and keep up with any existing repayments.

Theresa Lindsay, Group Marketing Director at Novuna Personal Finance, says:

“Practicing good money management will not only give you more control over your financial wellbeing, it also puts you in the best possible position if you want to borrow money in the future too. Don’t overstretch yourself – stay in control of your spending to make sure you are always able to pay your debts on time and review where you are every few months.”

If you want to find out more about how you can make the most of your money, read Novuna Personal Finance’s money guides.