Guide to personal finance – Part 2

A tip I was taught when I was young was never buy what you cannot afford. This is the best bit of advice I was ever given, not that I ever follow it. Luckily I am also married to a man who, though not mean, is very careful about where the pennies go.

By nature I am a bit of a spend thrift. If I have money in my pocket I tend to spend it. I give some away, buy frivolous things as treats for myself and others and buy more expensive food and I will do this until it has gone. Every bonus is treated as just that -a bonus, something to enjoy and spend. On the other had, if I spent just a bit of it and saved the rest we would probably be a lot better off.

I am learning however – being a parent and having a mortgage to pay does that to you – makes you learn about personal finance and one of the thigs I have learned to do is plan ahead. Now I manage my finances much better.

We have a fixed mortgage so we know precisely how much is going out each month, we use direct debit to ensure our bills are paid and we channel any extra into savings accounts for the children which helps pay for school trips, instruments, music lessons and all the other extras that schooling costs.

We also use the credit card less. Even though there is the incentive to earn points and rewards by using the card we only use it when there is no alternative (like if we are booking by telephone or it is the end of the month and there is nothing in the kitty. With our credit card, if you pay the balance each month, the interest is negligible so this is what we try to do.

Knowing my wanton disregard for money my husband has seen to it that we have ISAs (individual savings accounts, which are tax free and you can put up to 3200 in each year) which will help pay the mortgage and he also makes sure we use any extra money to pay off any outstanding bills or money owed.

Left to me, my personal finance would be in a mess but having someone around who is clear about what we need and what is purely wasteful certainly helps.

My advice would be this for personal finance – first, plan and keep an account for one complete month of everything in, everything out. See if you are over spending andif so, where. If there is any left over (and do allow some just to spend – who knows, you may want a book, make-up, some nice bubble bath or something else). Then put the rest away for that inevitable rainy day (or school trip to Germany).

Be open and honest with your bank and seek good advice. Try different banks and shop around for the best deal whether this is ISAs, a mortgage or simply the best kind of bank account.

Do not invest more than 35000 inany one bank as this is the maximum amount that the governement can underwrite if a bank goes under.

Once you begin to take control of your personal finances, everything else follows because you will be able to live within your means , debt will no longer be a mill stone around your neck and you can feel much more confident.