By Will Davies
February is the time of the year for letting that special someone know that you adore them. Whether you believe it’s a Hallmark holiday or a genuinely romantic tradition, there’s no avoiding it. So in the spirit of Valentine’s Day, why not make this the month the one you fall in love with your finances?
Any good relationship should be based on honesty and the one you have with your finances is no exception. Checking your bank balance sporadically, through half-closed eyes, and only when you have to, will not lead to long-term happiness. Harmonious co-existence with your money can only happen when you are really honest with yourself about your current situation. Before you enter in to any new relationship, it makes sense to deal with your baggage and in terms of finance that means debt. You might fall helplessly in love, but it pays to stay rationally in control of your debts. Debt in itself isn’t a bad thing, but too much debt clearly is, so it is important to keep them under control. Most debts will incur a higher interest rate than potential savings accounts so it is a false economy to leave them outstanding and will only diminish the value of any savings you do have.
Romantics don’t have to have their head in the clouds, they can be practical too and what could be more practical than setting yourself a budget? By reviewing your incomings and outgoings, you will get a clear understanding of areas where your money could be used more effectively. Having done this, it is now time for you and your finances to set some clear relationship goals – where do you see yourselves in a year’s, five years’ or ten years’ time. Just what type of a commitment are you wanting to make – is a large purchase on the cards, are you saving for a significant event or do you want to be free from debt?
Once your goals have been set, it’s time to explore how they can be achieved. What kind of savings account would suit you best – for beginners, perhaps a regular saver account, for those not shy of commitment, a Fixed Term account locks your savings away for set amount of time and allows your savings pile to grow; for those who fear commitment, consider an Easy Access account which allows you to save but also to access funds should the need arise. While February is all about romance, March and April are all about ISAs – so spend time exploring whether you and ISAs are compatible and which type you would be best suited to, a Cash ISA or a Stocks & Shares ISA. Choosing an ISA product is really a question of risk – Cash ISAs may suit the risk averse and for those willing to take a calculated risk, Stocks & Shares ISAs could be a perfect match.
The more you love your finances, the more they’ll love you back.