“If you learn the art of money management, you’ll find that a few pounds go a long way” a popular financial expert has said. Every month’s beginning brings the paycheck and loads of happiness. Yet, the money’s over even before the end of the month. If managed in a better way, money can help you stay on top of your bills and save thousands of pounds in the bargain. You can put these savings towards clearing your debts or spend them on your next holiday. We tell you how you can make your own budget and stick to it.
Set Up a Budget
A budget is a summary of all your incomings and outgoings. They assist you in getting a clear picture of where and how you spend money. It’s often the first step to gain control over your finances. Making a budget entails a bit of effort but you’ll find that it’s worth it. What you can gain from budgets are:
- Little need of extra credit
- Manage unexpected costs with ease
- Good credit rating
- More likely acceptance for a home loan
- Spot areas where you can cut down on spending
- Save up for a holiday or new car
To begin with, you should work out how much you spend on household bills (utility and power), living costs (rent), financial products (life insurance), family (gifts), travel (car fuel, public transport) and leisure (sports, restaurants). You can either do this on paper or using spreadsheet software.
Get Your Budget On Track
An easy way to get your budget back on track is to find out where money is being spent and whether it can be cut down. Simple things like carrying your own lunch to work go a long way in eliminating expenses. Money management tip: Keep a note of everything you buy in a month.
Money management is successful only when every family member follows it. Sit down with your partner and children and discuss how each one can reduce their spending. Mutual consent is essential.
Cut Household Bills and Mortgage
When a household is thoughtfully run, the bills automatically reduce. Turn off lights and heating when not required. You can also look for a new mortgage deal that saves you thousands of pounds in the long run.
It takes time for the result of your actions to reflect. Remember that managing money is an art at which you get better and better. You won’t end up saving hundreds of pounds overnight so be flexible.
Prioritise Your Debts
Prioritising your debts means paying off those first that are an immediate priority. For example, credit cards and store cards normally charge a high rate of interest. So, it makes sense to be relieved of them as early as possible. Even if you’re focusing on paying off another debt, keep to making minimum payments on credit cards and loan agreements. You could also get help regarding so-called ‘priority debts’ like rent, mortgage, court fines and council tax to name a few.
Aim For High Savings
As much as it’s tempting to spend money, saving is done by few people. However, with budgets, it’s easier to achieve your savings goals. Your first step should be to create an emergency fund to fall back on in case you fall sick or your boiler breaks down. This can be done by saving a few pounds each month into a savings account. Once done, aim for other savings goals like:
- Buying a car up-front without a loan
- Taking a holiday with your own savings
- Having extra money during a maternity or paternity leave
Invest Your Savings
As your savings grow, you can put pounds into your pension and life a comfortable life after retirement. Draw up investment plans in line with your goals so that you know how much to save as you grow older.