Key Areas

Do you already know a lot about personal finance and balancing a budget?

If not, this short guide will help you make sensible financial decisions and move you closer to achieving your financial goals. Each part of the guide suggests some basic principles to keep you on the right track.

Setting A Budget

What do you do at the moment when you receive your paycheck or monthly allowance? Do you live from month to month or have a better plan? A budget will keep you on track for financial success, ensuring you don’t spend what you don’t have and making you think twice before a spur of the moment purchase. By establishing what you have coming in, against your outgoings, you can balance your needs and wants against the cash you earn—and decide what your priorities are. Setting yourself a budget can also help you to save for more expensive purchases, such as a new car, a deposit on a home or can help you reduce debt.


Budgeting is merely the art of spending less than you earn. Unless you document how much income and expenditure is, you will forever be in the dark about where you actually spend all your money - and see if it is on the things that genuinely matter to you or not. A budget will also help prevent you from sliding into debt.

Setting Your Budget

  • Write down all of your outgoings and income every month. Check through your bank statement, credit card bills, and receipts. Don’t forget to add up all those small cash purchases too.
  • Write down your fixed expenses. These are items you pay for every month, such as car repayments, rent, student loans, mortgages, club membership fees, or insurance premiums.
  • Write down your expenses that are not fixed and categorize them into things you want to have and things you need to have. Need to have items may include transportation to get to work or college, groceries, and utilities, and want to have items may consist of travel, vacations, or the latest gadgets.
  • Decide on a maximum spending limit for each category, so that the total of all outgoings amounts to less than you have coming in.
  • If you find that you need to rein in your spending, the easiest category to make cuts in is your nonfixed expenses. Although this may not be pleasant in the short term, restricting the number of times you eat out each month is an example of how you could cut nonfixed costs.
  • Another alternative is to reduce fixed costs. Could you move to a home with cheaper rent, take in a roommate, or have a cheaper car, for example?
  • Record your spending habits for a few months and modify your budget as necessary. There is a good chance that there are some expenses you did not previously consider that could be reduced.

Debt and Credit

Do you have student loans or credit card bills to pay? Perhaps a car loan or mortgage? Taking on debt is not always a negative as it can sometimes be the only way feasible to purchase big-ticket items such as property or cars. Building yourself a reputable history with the banks will make it more likely you will be approved in the future if you want to borrow. Without a history of paying off debt on time, it may prove challenging to get a new credit card or a mortgage when you want or need one.

Too much debt can devastate your budget and take over your life if you are not careful. Not keeping on top of repayment schedules can also have a damaging effect on your credit score, which lenders look at to decide if they want to lend to you, or the interest rate they charge. A poor credit rating may result in refusals or only being able to borrow at disproportionately higher interest rates than typical.


Developing a good credit score does not happen overnight. By beginning young and responsibly, perhaps with a credit card that has a limit of a few hundred dollars, you can start to create a credit history. Keep a close eye on due dates,( it sometimes takes a few days for your money to clear with the credit card company so make sure you pay in good time) repayment amounts, and the interest rate you are paying. Paying off the highest interest rate borrowing first is an excellent way to reduce expenses – but not at the expense of repaying other debt you may have.

Managing Your Debt

  • Write down any outstanding loan balances you have together with the payment dates and the interest rate you are paying.
  • Aim to clear the debt with the highest interest rate first. This is typically credit card debt, but check the rates you are paying first. Depending on where you are, interest on mortgages could be tax-deductible, which would lower its cost.
  • If possible, see if you can refinance or consolidate your loans. Beware of expensive consolidation fees and do not be tempted to extend the loan period.

Save for Aspirational Purchases

If you are ever planning to get married, buy a car or a home of your own, or retire, you should get into the habit of saving. Retirement may be many years away, but the earlier to start preparing, the better chance you have of a comfortable retirement. Saving for big purchases such as a home (or at least the deposit) can take time because of the high average cost of properties – and this is likely to increase.


Savings should be a part of your monthly budget. Save a reserve for emergencies first then start saving for other items. Set yourself realistic financial goals and a timeframe to achieve them.

Initiating a Savings Plan

  • Set up an emergency cash reserve. A general rule is an amount that will cover your outgoings for a period of at least three months – more is better.
  • Set other goals. It might not be practical to save for everything you want to buy in one go.
  • Incorporate savings into your monthly budgeting. Establish how much you can realistically save each month.
  • Stay on course. Arrange with your bank for a transfer into a savings account to be made each month automatically.

Investing for Future You

The world of investments can appear overwhelming, and there is a barrage of advertisements online, on tv, and on billboards that purport to provide the solution to your needs. It’s easy to delay making a start for another day, another week or another month, but each delay is just putting off the inevitable – and costing you money in the long term.

While media coverage like to sensationalize stock market ups and downs – especially the downs – over the last century, shareholdings and investments in the stock markets have provided by far the highest returns. Government and corporate bonds, increased their value by a much smaller amount, with less volatility in prices along the way. So while stockmarket investments can rise and fall more, bonds and cash deposits have a higher chance of not keeping up with inflation – meaning over time your money would have less spending power, and you may not reach your financial targets.


Not learning about investing is not an option.

Establishing An Investment Plan

  • Align your timeline and where you invest.
    • For emergency reserves and funds needed in the next two years, put your cash in a savings, or money market account. Cash deposits such as these give you easy access to money when you need it.
    • To fund spending requirements over a two to five year period, consider low-risk investments such as bonds, but also add some return-based assets into the mix, such as stocks. Shareholdings also help to widen your exposure to inflation or interest rate rises, which negatively affect bond returns.
    • For longer-term objectives, stocks are the way to go. Short term volatility is not a worry if you are not planning to encash them any time soon, and historical data indicates that the rewards are likely to be greater. Diversify your investments with some bonds for income and stability.
  • Also, don’t put all your eggs in one basket. By this we mean diversify your shareholdings by company, sectors, and even geographical location. Diversification lowers risk as different investments rise and fall in value at different times.
  • Don’t buy and sell too frequently. Too much short-term trading can lead to higher transaction fees and lower overall returns.

Long-term Wealth and Financial Security

The cash, investments, and other assets you own—after taking into account any outstanding borrowing—make up your wealth. Wealth can be inherited, gifted – or in most cases earned by savings. Wealth can also be accumulated by investing in a business or by making investments that increase in value over time.

For younger investors, the prospect of retirement can seem far in the distance. However, the sooner preparations are started, the better the chances of a comfortable retirement. Tax-deferred retirement accounts are especially useful as they enable you to grow investment dollars that would otherwise be lost to taxation. Some employers offer non-contributory pension schemes or schemes you can add additional funds too. These are often the best way to start preparing for your retirement.


Time is a critical factor when investing, and younger investors have the benefit of having lots of time in front of them. Years of compounded interest on investments can make a sizable difference to overall returns. Short term volatility can be managed if the assets are intended to be held for an extended period and don’t need to be sold in the short term, when values may be at a low point. This enables the younger investor to have exposure to more riskier investments as the ups and downs will be evened out over time.

Accumulating Wealth

  • Research which retirement vehicles are available and closely scrutinize their terms. If the company that you work for has a pension plan, it is advantageous to take part in most circumstances.
  • A longer investment time enables younger investors to accept more risk than would be advisable for shorter periods.
  • Stock market investments have a higher potential to generate better returns than bonds.
  • Diversify your investments across investments in different companies, investment types, and geographical location, so you’re not at risk of a substantial value decrease in one area.

VyoGroup Wealth Management does not provide tax, legal, or accounting advice. When considering this information, you should discuss your individual circumstances with professionals in relevant areas before making any decisions. This information is for informational purposes only and should not be interpreted as an offer or solicitation to purchase or sell any financial instrument, product, or service.

If you are a younger investor and would like more information about planning a solid financial future, contact VyoGroup Wealth Management. You must be 18 or older.