Taking the time to manage your money better can really pay off. It can help you stay on top of your bills and save £1,000s each year. You can use these extra savings to pay off any debts you might have, or put them towards your pension. Perhaps you could even spend them on your next car or holiday. Read on for money management tips, including how to set up a budget, sticking to it and how to save.
Over half of UK households keep a regular budget. Most say it gives them peace of mind about how much they are spending, and makes them feel better about life in general.
There are a number of ways you can manage your money better. This includes using a Budget planner tool, or any number of apps. Even a simple spreadsheet or a paper list if you want to go retro can work well!
Starting a Budget
As with most things in life, sitting down and starting to work on your budget is generally the hardest part. It’s easy to keep putting it off, as you know it won’t be a fun job. Unless you’re particularly keen on lists and spreadsheets.
But once you get started, writing out a budget for yourself or your household isn’t too complicated. You’ll need to look at all your regular transactions, such as your housing payments, utility bills, Council Tax, loan payments and grocery shops. So your bank statement is probably a good place to start.
Once you’ve made a list of all your priority expenses, you can then focus on your non-priority costs. We don’t recommend cutting these out entirely – your mental health is incredibly important, so at least some of your recreational costs are necessary – but you can prioritise these costs.
Work out exactly where you can save money, and don’t include these expenses when you write out your budget. You may even want to keep a separate list of things to avoid!
Sticking to a Budget
Although creating a budget can be time consuming, it’s sticking to your budget that’s the really difficult part.
It’s so easy to talk yourself into buying things you don’t need if you want them badly enough. And if your friends, partner or kids are trying to persuade you that you should buy these unnecessary items, you’d need incredible willpower (on the same level as the Hulk’s strength) to resist.
So how do you stick to your budget? The key is getting everyone on board. It can be difficult to discuss your finances with your loved ones. But you don’t need to go into detail if you don’t want to. Just make it clear that you’ve challenged yourself to stick to a budget for at least a few months, and you need their support.
As long as everyone in your household understands the importance of sticking to a budget, you’ll be able to support each other, which makes managing your money much simpler!
How to Save
Once you’ve set up your budget and have convinced everyone in your household the importance of sticking to it, it’s time to start thinking about saving.
As with keeping to a budget, there is one main thing to keep in mind when it comes to saving. The secret is putting your calculated monthly savings away as soon as you get paid.
So if you’ve figured out that you can set aside £100 a month (hopefully with a bit of flexibility in your budget) you can move that £100 into a savings account or something similar once you’re paid. That way it won’t factor into your monthly figures at all.
There are several bank accounts that can help you do this automatically, such as Monzo. They have loads of cool functions that will help you save money in general – for instance, they’ll round up the pennies when you make a transaction, and put these into a savings account. It’s amazing how quickly these can add up!
Money management is not always easy, and if an unexpected expense crops up, you may need to take out a loan to cover the cost. But if you’re organised, you may be able to put some money away for a rainy day!