Financial literacy, or being debt aware, should be a top priority because it ensures that you remain in control of your finances. Debt awareness takes two forms: having the power to stay out of debt in the first place, and knowing how to manage your finances if you owe money to organisations such as banks and loan providers.
In this article we’re looking at how to become debt aware to full effect and the benefits it will bring.
No debt is unsolvable
Let’s begin with some reassurance, as debt can always be solved one way or another. The key is to fully understand not only how much you owe, but also who it’s owed to, the dates of repayments, any interest that will be added, the penalties for late payments, and how to factor everything into your monthly budget.
By having total clarity around what you owe, it becomes much easier to gradually improve the situation until you find yourself completely free of debt.
Do I have a debt problem?
Most people owe money in one way or another. It could be a loan for home improvements or something as commonplace and necessary as a mortgage and car finance.
Whatever the case, the main thing to bear in mind is that it’s only a debt problem if certain behaviour is evident:
- Using your credit card more often and for essential purchases such as food and energy bills.
- Worrying and becoming stressed or upset over your debts.
- Falling behind on your mortgage repayments and household bills.
- Struggling to pay the minimum monthly payments on your credit card.
- Having to borrow money from friends and relatives.
- Relying on quick fix short-term loans with very high interest rates.
Tips for managing debt
There are multiple ways to make debt more manageable. Some are everyday actions that are very easy to follow, whereas others take a more strategic approach.
- Keep everything in one place: This could be in the form of a spreadsheet or a digital platform such as LegacyScore. Being able to see all of your debts in one place means that you gain a clear picture of where you are and where you will be with each month that passes, greatly facilitating effective budgeting.
- Identify money-saving opportunities: This may seem like an obvious point but the less money you spend, the easier it will be to manage your debt. It doesn’t have to be a case of being super thrifty, as there are multiple ways to cut down monthly costs. Prime examples are cancelling any direct debits that are no longer required – unused gym memberships, superfluous subscription boxes and unwatched streaming platforms are some of the most common culprits of unnecessary expenditure.
- Check your balance regularly: A good habit is to check your bank balances on a daily basis. As well as helping you to monitor your financial activity, this is also a way to make sure that there aren’t any unexpected or fraudulent transactions taking place.
- Scan the market for better deals: Why overpay for something you can get cheaper elsewhere? LegacyScore can help you identify better deals for some of life’s essentials such as insurance premiums and loans.
- Set savings goals: It’s amazing what can be achieved when you have a clear objective to work towards. Many people find that setting a savings goal also helps them to change the way they spend, which could even result in you being able to make overpayments on your debts.
Manage your debts with LegacyScore
LegacyScore is designed to bring all of your finances together in one place. This can make it significantly easier to manage your money, budget effectively and work towards a more prosperous future. Sign up for your free LegacyScore account today.