I thought it was time for a bit of a Q&A. I get asked these 3 questions a lot so I thought it might be useful to put some brief comments that may help on a blog:
Should I save or clear my debt?
If your credit rating is decent, which you can check at Clearscore, you can probably do both. You could shift a credit card debt (for example) on to a 0% rate and also save some money every month in a regular savings account paying 5% or 6% interest. If you can’t get a 0% card, then start clearing your higher interest accounts first and then once this is done, the saving starts. The key here is to build the savings habit whether it is clearing debt or stashing money away. Make sure you know the terms of the accounts as well. They are very tricky indeed those banking institutions, they want you to fail at this stuff.
What is the best way for entrepreneurs to take out life cover?
There is a type of policy relatively unknown called a relevant life policy, which is a personal life insurance policy that can be taken out and paid for by the business. In simple terms it is the same as taking out a term assurance but you don’t pay for it out of taxed income. There are a few requirements to qualify and it only really works for those with limited companies. It is a pretty tax efficient way of covering your life for the benefit of your loved ones.
What is the easiest way to budget?
I am going to cover this in a blog I am just writing, but I have found that the easiest way to budget is to use a spreadsheet like this and/or a spend tracking software such as money dashboard. You could do both if you feel that your estimates are not working. Any decent business should know its expenses and my belief is that people (particularly business owners) should run their finances like a business. It is all about cash flow!