What is the difference between fixed rate and variable rate loans?

Put very simply, a fixed interest rate loan means that the interest you pay on the money borrow (usually given in percentages) will always remain the same throughout the duration of the agreed term. When the market fluctuates and interest rates change, yours will stay the same as what you agreed to when you signed for the loan.

Variable rate is the opposite, the interest rate on the outstanding balance will change as the market does. So sometimes you’ll be paying a low-interest rate, sometimes you’ll be paying a high interest rate.

You’ll need to do a bit of research when deciding which loan interest rate to go for as, if you are signing on when interest rates are low, it is best to get a fixed term. However, studies show that people with a variable rate often end up paying less interest over the term of borrowing.

What are Payday loans?

Payday loans are short-term loans that are designed to be used for only a short period of time – or until your next payday, hence the name. Because they are only supposed to be for a short period of borrowing time, the interest rates are normally really high and the late repayments fees are often crazy. It is very easy for the costs to add up, leaving you in a worse position than before.

How can I build up my credit rating?

There are a few key factors that are considered when you apply for credit and building it up can be tricky. While your previous financial past does have some bearing on your score, a positive incline of personal finance management can improve the rating over time. Don’t apply for unobtainable lines of credit, even if you just want to see if you would get accepted, rejections are recorded on your credit file. Start with a low limit credit card and pay off the balance in full every month.

What’s the best way to save?

Create a budget and factor in an amount for saving, and stick to it. See where your money is going and identify if there are ways to reduce them, try switching internet or electric suppliers. As soon as you get paid, put this designated amount into a savings account, treat it like a bill that needs to be paid.

A simple savings account is the best choice for when you are starting to save, get one that has a no access clause, or needs advance notice of withdrawal so you aren’t tempted to withdraw money on a whim.

What is an emergency fund?

Sometimes in life, things happen that are outside of our control. Car breakdowns, funeral costs, repairs, these can all be very expensive and if you aren’t prepared for sudden expenses you may turn to less favourable ways of raising the money in order to pay for what needs to be paid. An emergency fund can help buffer the costs of these emergencies, making the burden less. Try to save between four and seven months of what you would normally spend day to day and keep it in a separate account for cases of emergencies.

How can I earn more money?

Personal finance is as much about saving money as it is earning money, find a balance between the two to ease the stress of focusing on one or the other. If you’ve got a hobby that can be monetised, utilise it on freelance websites or set up an online business where you can pick up work as and when. Side jobs are great if you can handle the extra hours you’ll have to put in.

If you don’t fancy taking on a second job, assess the position you’re already in at your current place of work. Are you due a pay rise? Is your employer keeping up with minimum wage increases? Hire an accountant to look over your tax code and payments to thoroughly check if you’re in the correct banding.

Should I start investing?

Investing is buying or putting money into something to get a profitable return, this can be by buying company shares, savings interest, property investment or bonds. Any of these can be great for potentially increasing your money flow, but none are completely no-risk. There is always a chance for market fluctuation and change that could leave you with nothing. Do proper research and consider your finances before looking into investment.

Should I join up my finances with my partner?

Making the decision to jointly manage finances with a partner is a tricky one. There’s a lot to take into consideration and couples often come up with their own personal ways in which to do that. There might be some areas where you’re happy to share responsibility and others that you need to take care of for yourself. Find out each other’s approach to money and finances and see where they match up and where they don’t, you may not agree on every point and have to compromise, but find out as much as you can about credit history, debts, spending and come up with a way that works for you.

There are a few main structures when it comes to relationship finances. The first one is keeping your money totally separate, with individual accounts, splitting bills up so that you pay different costs that equal the same. The opposite end of the scale is sharing everything in a joint account. Both wages go into one account and expenses and costs are withdrawn from there, this only works if you have similar spending habits.

The middle ground solution is to deposit an agreed amount into a joint account to pay for bills etc and then keep another amount in personal accounts.