If you're trying to get your finances on track and money management isn't your strong point, here are 10 top tips to help you get started.
Is your ultimate goal to take control of your finances and start saving for the future or something that’s important to you? Here are our top 10 tips to help you create a budget and get your finances back on track.
1. Be realistic when budgeting
Having a realistic approach to budgeting is important. Being too strict in your budget will lead to overspending, and this will defeat the purpose of having one in the first place; don’t deny yourself things you enjoy – just limit yourself to a sensible amount. If you need time to adjust, try cutting your ‘unnecessary’ spends a little more each month.
2. Identify opportunities to cut costs
Sometimes, it feels like half of your pay cheque has disappeared before it’s even hit your account! Keep an eye out for ways you can save on necessary outgoings. Try:
- taking packed lunches to work instead of buying out every day
- checking out employee benefits packages, which could save you money on glasses, gym memberships and more
- using comparison websites or apps which can help you identify better deals on household bills, car insurance, etc.
3. Know exactly what’s going in and out of your account
Your bank account is one of your most valuable possessions, albeit not one you can physically hold. If you don’t know exactly what is and should be going in and out of your account, why not? Keeping a close eye on your incomings and outgoings will help you understand your spending habits and draw your attention to any unusual activity.
4. Find a budget partner
If you struggle to stay motivated when it comes to saving money, find a friend or family member to do it with you. You can hold each other accountable, support each other in difficult times, or even turn it into a friendly competition – whatever works best for you.
5. Set savings targets
Have an idea of the amount you’d like to save each month; if you’re saving for a specific reason (e.g. for a new home, car or qualification), it should be easy to work out how much you need. With a monthly goal, you’ll feel determined to achieve it and, who knows, hitting target may begin to feel more satisfying than splashing out on a new outfit or dinner out.
6. Make use of apps that can help you
If you’ve never made a budget before, it can be hard to know where to begin, so make the most of apps that are out there and ready to use. Mint is an old favourite, and there’s also You Need a Budget (perfect if you want to take the ‘budgeting to zero’ approach) and PocketGuard, which doubles up as a comparison searcher to help you save those pennies.
7. Set up a direct debit - to yourself!
If you know that you find it difficult transferring money into a savings account each month, why not set up a direct debit to transfer funds directly each payday? The theory is, if you never had the money, you can’t miss it (think tax, pension contributions and student loans…) – the great thing about this automatic reduction is the money still belongs to you!
8. Make debt your priority
Have you got an unpaid debt weighing you down? This isn’t only bad for your finances, but your wellbeing too, as it’s reported that one in four people suffering with a mental health problem are also in debt. Prioritise paying off any debt as soon as you can (try the direct debit trick to your credit card) and you should soon have a more positive outlook - and more control over your financial situation.
9. Limit your direct debits
If you’re prone to signing up to everything, from charity donations to every subscribing website out there, set yourself a limit as to how many you allow yourself. If you don’t want to only donate to one charity – change them throughout the year.
10. Remember, no month is the same
Don’t assume that the same budget can apply year-round. While many expenses remain the same each month, there are one-off spends which people often forget to account for when predicting outgoings and these could hit your budget hard. Special occasions, MOT and TV licence are just a few occasional expenses you may forget to account for.
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