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Money is just like time. However much we have we just want that little bit more. But when that little bit more does happen, it is never quite enough.

Many of us dream about having lots of money. Imagine having no more money worries and being able to buy anything we want whenever we want it. What could be better?

Well funnily enough, it would appear that having a large amount of money does not necessarily make you happy. Recent research published in Nature magazine found that there is a “satiation point” at which higher incomes no longer lead to greater well-being.

The research – which was based on representative data from over 1.7 million individuals in the Gallup World Poll – found that the overall average satiation point was $85,000 (ie around £65000). It was found that for incomes above this point, there could sometimes be a decline in well-being.

Now £65000 is well above the household income for many people in the UK. But it is interesting – and encouraging – that the figure that would appear to be enough to make you happy is not significantly higher than this.

It would therefore appear that you don’t need a huge fortune to be happy. In fact we have probably all read about people who have come into a great deal of money and ended up worse off in many ways than when they started. They have either wasted all the money and have nothing left to show for it, or ended up in lots of bitter family squabbles about who gets what.

But even though we know all this makes sense, most of us really would like a bit more money. Whether it is to get out of debt, splash out on something special, or help our son or daughter get a roof over their heads, more money would definitely be welcome.

So as the season of New Year’s resolutions is gradually creeping nearer, why not resolve that 2019 will be the year you really get to grips with your finances? This time next year you may not be rich but wouldn’t it be great to feel in control of your money at last?

Why not have a read through our Seven Steps to Solvency and see if this is something that you could make work for you? If you start the preparatory work now you could get your finances off to a flying start in 2019!

1. Make friends with money

That might seem an odd way to start, but so many of us see money – or lack of it – as the enemy. We are so used to struggling to make ends meet and worrying about money that it becomes a huge obstacle in our lives.
It can really help to take a deep breath and try to see money as just one of life’s resources. Yes, it may be the case that right now there is not enough of that resource in your life, but that is something that you are now going to try and change.
So trying to develop an attitude towards money that is positive – and not fearful – can be a really good start.

2. Decide your financial goals

What do you want to achieve financially in 2019? Whether it is paying off debt, buying a home or getting some savings behind you, write down those plans so that you can start working towards them.
As part of this it is really helpful to get the full picture of where you are financially. So also make a list of all the money that you have – for example any savings, investments, gifts – and all the money you owe – for example loans, overdrafts and credit cards.
You then have all the information you need to get started.

3. Make a monthly budget

This is well worth spending time and effort doing well as it is the key to getting your finances sorted out.

You need to make a list of everything you spend each month. You can do this on paper or a computer – or may even find an App to help you. Do whatever is easiest for you and that you will be able to stick to.
Start with all your regular payments such as mortgage/rent, loan/card repayments, household bills, subscriptions etc. It is a good idea to pay these by direct debit so that they all happen when they should and also you know exactly how much money is going to be taken out of your bank account and when.
Then add to your list any essential spending, for example food and transport to work.

Also make sure you then add anything else that you regularly spend money on. Include absolutely everything so that you can get an accurate picture of exactly where your money is going.

Now make a similar list of all the money you have coming in every month – including salaries, tips, bonuses, benefits, interest on savings, any contributions from family. You need a clear overall picture of all the money at your disposal.

Preparing a budget will give you a good overview of where you stand financially. From this you should already be able to see whether you are just about ok financially or need to make some changes.
But there is more to be done! Read on …..

4. Monitor your budget

Even if your budget looks fine on paper, you may find that you are still struggling to make ends meet by the end of the month. So to make sure your budget is accurate you need to monitor your spending for at least a couple of months. This will take effort but will be well worth it.

So record everything you spend, either in a notebook or computer spreadsheet or phone app. You may well be surprised at what you find! For example, many of us spend far more on food than we would expect: we might write down one figure in our budget but find we are spending almost twice that without realising.
Recording expenditure can be a bore, but without getting a true picture of where your money is really going, you won’t be able to get on top of your finances.

5. Balance the books

Now you know where money is going you can review your budget so that it is really accurate. If you already have enough money to cover your expenditure then that’s great – and you can skip to Step 6!
If not, then the next step is to change a few things as needed, so that your expenditure fits within your income. Again, this will take time and effort but will be worth it in the end.

Firstly review every item of expenditure. Is it essential, and if so could you get it for less? This is a good time to check every bill and see if you can get a better deal: so get in touch with various suppliers such as broadband, energy companies, insurers etc to see if you can get some of your costs down. Also check all your bills to make sure you are not paying for anything you don’t need: it is so easy to keep subscriptions and memberships running for goods and services we no longer use.

If you are shocked about how much you are spending on food then have a rethink about how you can reduce your food bills. For example, planning meals in advance and either buying in bulk or shopping around for good offers can all help to cut the costs.

Also be strict with yourself about non-essential expenditure. Always be on the lookout for cheaper ways of doing things: eventually this will become your natural way of doing things.

Many people find it helpful to start using cash instead of cards. Plan how much you have to spend each week and take out that amount in cash, which you then use for all your spending. It can really bring home the value of every penny when you are using cash to buy things instead of putting them all on a card.

If you are doing all the above and are still struggling, then you also need to look at different ways of increasing your income. This could be changing your job, taking on additional work, taking a lodger or selling some household items: it really depends on your circumstances and the scale of the problem. But it is important to think positively and to remain determined to get your finances sorted.

6. Pay off debt

Many of us struggle financially from month to month because we are carrying around a lot of debt and the monthly repayments are dragging us down. So as soon as you have spare money in your budget it is important to get those debts paid off as soon as you can. Once they are paid off there will be more money available to help you live from month to month, and also to start saving.

If you have a lot of monthly payments – for example credit card payments – it may be worth considering taking out a short term loan to pay off all the balances and consolidate repayments into a single affordable monthly payment. It is important not to get further into debt, but to find the best and most reliable way of paying off your debts as soon as you can.

7. Get saving

It is so helpful to have savings – yet around 10 million households in the UK have no savings at all and a further 3.26 million households have savings of under £1,500. This means that when unexpected costs arise – such as car repairs, boiler breakdowns or family emergencies – we fall back on credit cards, running up more debt.

So as soon as you have followed the previous six steps you really do need to start saving. Put aside a little money each month – ideally into a different bank account that is not too easy to take money out of. Even if it is initially only a very small amount it means that you are starting to establish good financial habits. Your savings will gradually grow, which means that you will have money available for special treats as well as the kind of situations we have just mentioned.

We hope that our Seven Steps help you to get your finances under firm control in 2019, and that you can work towards the situation where you have enough money to make you happy.