I’m an area manager on 36k. I live with my partner and son – do I need an emergency fund to fall back on?

Get your budget right

A budget provides a great way to manage your money and is key to paying off debt, but only if it works. There are many potential reasons for a budget breakdown. The main one is the numbers don’t match up; you may be budgeting ideally instead of realistically or simply spending more than you budgeted for. If so, your budget may need a little working on. Start by setting new goals which realistically reflect your expenses. Try using a spending tracker app to keep you in line with your goal. Lastly, stick to the budget; don’t just write it down and forget about it. Refer to your budget regularly and compare your spending to what you’ve budgeted to see how you’re doing. Easier said than done (I know!), but the more you do, the better it will get.

Avoid recycling debt 

No one tries to get into debt. It’s one of those things that happens without you noticing, or you may feel it’s out of your control. However, staying out of debt is possible. One golden rule is If you can’t afford it without a credit card, don’t buy it (harsh but true). One of the biggest dangers of having a credit card is living under the illusion that you can afford things you actually can’t. Instead, create an account or savings pot and add money each month to cover splurges and enjoyable expenses. If the money runs out, you must wait until payday to use it again. It may not sound fun, but it’s a great way to discipline yourself to manage your money more effectively and avoid going into debt, meaning ditching the debt instead of recycling it. Challenger banks such as Monzo and Zopa offer savings pots where you can easily allocate different pots under one account.

Plan for your child’s future.

As a parent, you want the best for your child, and financial planning for your child’s future will give your son a good head start in life. You might not be able to save much money in light of the cost of living, but a habit of disciplined savings will hold you and your loved ones in good stead for the future. You can explore a Junior ISA that will remain until your child is 18. Speak with a financial adviser to work out a plan that aligns with your future goals for you and the family.

Invest in yourself 

Too often, life gets the best of us, and we forget to invest in ourselves. Investing time and energy in yourself can make you feel more fulfilled and set you on the path to financial freedom. In financial terms, ‘pay yourself first’ could mean many things, such as setting up an emergency fund, ideally around 3-6 months’ worth of expenses to cover emergencies and prevent you from dipping into your savings unexpectedly or taking on unwanted debt. Starting or contributing towards your retirement, the earlier you start, the better. Creating a debt repayment plan as debt can be the enemy of financial freedom and can affect your overall well-being. Likewise, it could be as simple as building a more positive money mindset; shifting your thoughts and feelings can change your spending habits and keep you more focused on your future goals. Don’t forget to treat yourself; you work hard for your money, so it’s okay to cut yourself some slack now and again; just keep it under control.

Create a financial plan 

For many of us, “financial planning” may have some stressful ties. However, once your fixed expenses like mortgage and utility bills are accounted for, you can build a financial plan that meets your unique wants, needs, and future goals. What matters most is taking the initiative, sitting in front of your computer or notebook, and making your plan. It may feel daunting planning long-term, but your future self will thank you. A financial planner can help you build a solid strategy to build financial freedom, including a financial plan for your son’s future and to ensure you are adequately protected in unforeseen times.