Five financial tips from your future self to help you now

Imagine if you could fast forward into the future and see how your life is going. Perhaps you wouldn’t want to do that: good or bad, you’d rather not know? But one advantage is that your future self might be able to give a bit of advice to your current self, to help make your future just that little bit better.

Take money, for example. No matter what age you are now, there are probably a few good financial habits that you wish you’d got into earlier . . . and a few mistakes you wish you’d avoided. But the good news is that it’s never too late to start turning things round.

So here are five tips that your future self would probably give you to help you future proof your finances. They are:

• Do all you can to earn more.
• Live within your means.
• Get rid of debt as soon as possible.
• Build up some savings.
• Invest for the future.

For each of the above tips we list five practical actions that you could do to start improving that area of your finances. Even if you can just do one action for each of the five tips, you will be making positive changes in your finances. Your future self will thank you!

Do all you can to earn more

• If you think that you might be able to earn more money by changing jobs, then why not make this happen? Many employers are reporting job shortages at the moment, so now could be a good time to make the move. Or if you are happy in your current job, try asking for a pay rise. Our article Three potential ways to get paid more has useful information about how to do this.
• You may also want to consider taking on some extra work either on a permanent or temporary basis. For example a few shifts in a local bar or restaurant, or a weekend job in a store, salon or library.
• Many people are also plugging into the gig economy, either picking up freelance work or running their own business as a sideline. So if you have marketable skills – for example IT support, proofreading, baking, photography – or can offer an occasional service such as babysitting or pet sitting, there may be people out there willing to pay you for your services.
• Sell goods online. Whether you opt to declutter your home or sell goods that you have made, there are many opportunities to sell new and used goods online and potentially make a nice little profit.
• See if there is any potential to make money from your home. For example, taking in a lodger, renting out your driveway for parking or your garage or shed for storage. You could make money from unused space.

Live within your means

• You may still be counting the cost of Christmas, so at this time of year it’s doubly important not to overspend. The best way to do this is to create a realistic monthly budget then work hard to stick to it. If you have a clear idea of how much money you have coming in, how much is then going out – and where it is going – you will gradually be able to get on top of your finances.
• Look around to see if you can get a better deal on bills such as energy, phone, TV, broadband, and insurance. It is also worth contacting your current provider to say you are thinking of switching and see if they can offer you anything better. You can compare the cost of different providers on websites such as Money Supermarket, Compare the Market and USwitch. 
• Start planning your food shopping more carefully. Always factor in what you already have in the cupboard, fridge and freezer, and plan meals that will use those items up rather than leaving them to go to waste. It’s also a great idea to batch cook. Cooking double portions never seems to cost twice as much as just cooking one, and you build up a store of meals for later.
• If you need to buy clothes and household goods, don’t automatically just consider buying new. You may well be able to find top quality nearly new goods from online sites such as eBay and Facebook Marketplace, or local ads and charity shops.
• Rather than spending a small fortune on personal services – for example hairdressing, beauty treatments, DIY, decorating, gardening, babysitters or pet sitters – see if you can find friends and neighbours to trade favours with instead. 

Get rid of debt as soon as possible

• Make it a goal to reduce your personal debt in 2023. Start by facing up to exactly how much you owe, and how much you have to pay on debt repayments every month. Now imagine being free of all that, and be determined to make it happen.
• Many people find it helpful to focus on one debt that you will clear first, for example either the smallest or most expensive one. Throw everything you can at that debt to get rid of it. This could include money from some of the above tips on earning more money.
• Whilst you are focusing on crunching one debt, it’s important to still keep up with minimum repayments on all your other debts, otherwise your credit score will be affected. Also do your utmost to avoid taking on any further debt during this period, otherwise this will undo all your efforts.
• If you have any savings you may want to use some to pay off your debts. This can feel a bit heartbreaking, but once you are rid of your debts, you will be able to start building up savings again.
• If you have so many different debts that it is hard to keep track of them, it may be worth considering taking out a new loan to pay off all your existing debts and be left with only one monthly payment to make. But to be clear, the aim of this is not to take on more debt, but to convert many existing debts into one single remaining debt.

Build up some savings

• In today’s tough economic climate, it can be very difficult to build savings. But financial experts suggest that you should aim to have at least three months’ living expenses in savings. So this is a good target to aim for, perhaps by the end of 2023.
• One popular savings theory is the 50-30-20 rule. The idea is that of your monthly income you would divide it into three chunks, as follows
  • 50% on essential living expenses – mortgage/rent, bills, transport, food etc;
  • 30% on non-essential spending – socialising, entertainment, clothes, holidays etc;
  •  20% on saving money and/or paying off debt.
• If you are not currently in the position to be able to do anything like 50-30-20, just start saving whatever you can. The easiest way to get going is to open a new savings account and set up a direct debit to pay money into it every month. Treat it like any other monthly bill. Even if it is only a very small amount, you have taken the first step towards building savings.
• Try and see saving money as fun and a bit of a challenge. Think of different ways to save bits of money either regularly or on a one-off basis. Every small amount will help to gradually build your savings.
• Make sure that there is no extra source of money that you have overlooked. For example, it’s always worth checking that HMRC has all your up to date information and your tax code is correct, so that you are not paying too much. Also check whether there are benefits you may be entitled to without realising. And if you do come across any extra money, put it all into your savings.

Invest for the future

• As well as your immediate savings, it’s really important to look further ahead. So if you already have some savings, it could be well worth moving some of them into another account to start building up some longer term savings.
• If you are prepared to lock your longer term savings away, you may be able to earn more interest on your money rather than a normal savings account. For example, look around at:
  • Notice accounts.
  • Bonds.
  • Premium bonds.
  • ISA / LISA
  • Stocks and shares.
• One of the key ways to save for your long term future is to have one or more pensions. If your job has a workplace pension, make sure you are enrolled in it and also find out if you could pay additional contributions into it as well as the standard contributions. You could also consider setting up a private pension either as well or instead of a work pension. All pension contributions usually benefit from tax relief, which can make it an even better value way of investing for the future.
• Property is also a great investment for the future, so if you have been planning to get on the property ladder this could be a good aim for 2023. Even if you have to really stretch yourself to get your first tiny property, it could pay real dividends in the long term.
• One final way to consider investing for the future is by investing in yourself. If you have always wanted to gain more educational or vocational qualifications, with a view to changing your career – and possibly earning more money – then now might be the time to explore ways of doing that. If you need a short-term financial boost, one of our 24 month loans may be able to help you do this. It could bring you short term happiness and satisfaction, and longer term financial security.

We hope that this article helps you to think carefully about your financial priorities, and perhaps start to make a few changes where needed. Changes that your future self will thank you for!