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What financial type are you?
Published 12 July 2013 by Matthew Plant
Do you feel confident when it comes to money? Are you OK with the theory - but not the practice? A few tips on improving your financial skills.
Are you mystified by money? Fluent with finances? Or somewhere in between?
We did some research* to find out how people rate their money management skills… and found that knowing what to do with your cash and actually doing it are two very different things.
Which group would you say you belong to?
Dazed and confused:
"I don't really know what to do for the best financially"
"I know what I should do financially, but I struggle to do it"
Spoilt for choice:
"I know what I should do financially, but I find it hard to choose products & services"
"I know what I should be doing financially - and have acted on it"
More importantly, what can you do to improve your finances?
A lot! Too much to cover here, so we've put together a few top tips for each of the four groups…
Dazed and confused: "I don't really know what to do for the best financially"
In the UK, around 7 million people belong in this group.
Work on your financial skills and you could massively improve your standard of living. 'Personal Finance' means a lot of things, so let's start with the basics. You could:
- Check out the Money Advice Service guide to managing your money
- Draw up a budget. It's easier than you think.
- Get some financial advice. You can find an unbiased financial adviser on this site.
And of course, you could always check out the thinkmoney Managed Current Account if you're not already a customer of ours. Its built-in budgeting service helps you get all your bills paid on time - just click here to find out how our account works.
Confused: "I know what I should do financially, but I struggle to do it"
In the UK, around 17 million people belong in this group.
So - as far as you're concerned, the theory's one thing, but putting it into action isn't so simple! Rather than tackling everything in one go, try setting yourself one goal per month. You could:
- Draw up a budget. This'll help you figure out things like where you can cut back, and how much you can afford to save every month
- Cut back on one 'luxury'. Just one! If you spend just £20 less per month, that's £240 in a year.
- Set up a savings account. Having some money in the bank can make a huge difference to your financial security - it should make you a bit more 'disaster-resistant' and lower the chances you'll have to take on (more) debt to cope with unexpected costs.
Spoilt for choice: "I know what I should do financially, but I find it hard to choose products & services"
In the UK, around 8 million people belong in this group.
There's so much to choose between these days, but you don't need to make your mind up alone.
- Compare deals on sites like uSwitch. They'll help you figure out what's out there - and how different products compare.
- Don't just focus on price! Find out exactly what a product / service delivers
- Read the small print on things like insurance policies to make sure they'll do what you need them to.
- Have a look at some independent customer reviews - check out what Feefo says, or put '[product name] reviews' into a search engine.
Sorted: "I know what I should be doing financially - and have acted on it"
In the UK, around 19 million people belong in this group.
If you're well and truly on top of your finances, that's great! Less than 40% of the country can say that. But life doesn't stand still, so…
- Review your budget to make sure it's still relevant. You should do this regularly - every January, for example - and whenever something big happens, whether it's a payrise, a paycut, a birth in the family, a new house…
- Know when your policies run out. Don't just automatically renew them - set yourself a reminder a month before a policy's due to run out, so you have plenty of time to look for a better deal. Even more important, you don't want to drive around without insurance simply because you didn't know it had run out!
- Know when it's time to switch. Say you're building up your savings. Do know how much you'll need to save up to open a savings account with a really good interest rate?
* OnePoll Research carried out a survey of a representative sample of 2,000 UK adults on 24.05.13. Figures have been extrapolated to fit ONS 2013 population projections of 50,371,000 UK adults.