Money management is a really handy skill to have - and it’s not difficult to get the hang of it.
Keeping on top of your finances will help you to save more, spend less, and build up a financial safety net for any unexpected expenses. Good money management is not just important for your finances. Worrying about your finances can cause stress, anxiety and countless sleepless nights!
Poor money management can cause all sorts of trouble, financial and otherwise. If you don’t balance your income with your outgoings, you’ll quickly find yourself struggling to make ends meet. Not only will bills start piling up, but credit repayments may get out of control and you’ll be low on money for essential items like food and household bills. You might then take out a loan to cover the cost of these items as a short-term fix, only to find that it becomes a long-term problem as you continue to struggle to pay back money you owe. So if you’re looking for some tips on managing your money, read on.
Make a budget and stick to it
If you want to avoid any financial shortfalls and comfortably keep up with your bills, repayments and essential spending, a budget is a great place to start. It lets you keep an eye on how much money you have coming in (your salary or wages) and how much you spend on everything month to month.
It’s really easy to create a budget. There are plenty of free online budget planners (the Money Advice Service, for example, offers a number of different tools to help with this), but you could just use a spreadsheet on your computer or even a pen and paper. Whichever method you use, make sure that you include all of the money you earn or receive each month, including your salary or wage, benefits and tax credits. Also include the money that you spend on things like your rent or mortgage, insurance, credit payments. Add to these your food, clothing and entertainment expenditure – be realistic and honest with yourself – if you are realistic with your budget, the more likely you are to stick to it.
Once you have this all written down, you can go through line by line and identify areas where you can make cutbacks and save money. Could you buy your groceries from a cheaper supermarket? Is there any way that you could get a better car insurance policy? Are you spending a lot of money on unnecessary extras that you could do without? Remember that those coffees on the way to work add up and could be costing you £50 a month which could be spent elsewhere!
A budget will help you identify what your financial priorities are as well as areas you can save. Focus on those priorities and make sure that you stay on top of essential payments such as your rent or mortgage, gas & electricity and council tax.
Then prioritise your credit repayments – can you save here? Check the rates you are paying on your loans and credit card balances. It may be that a consolidation loan can save you money here and help you balance your budget.
Budgeting tools make it even easier
When you sit down to draw up your budget plan, try using an online budget planner to help. Online tools make it even easier to get your finances in order, and most take you through the process step-by-step. They will ensure that you capture every expense, so that nothing comes along to derail your budget.
A full budget plan can take around 20 minutes or more to complete, but don’t let this put you off - it’s essential if you want to get your finances in order. It might be helpful to have copies of your household bills, payslips, receipts, and bank and credit card statements to hand so that you can refer to these for accurate information.
Online budget planners ask you for information about your income, including things like your salary and any benefits or student loans you might receive. Further into an online budget plan, you’ll be asked to provide information about your expenses, which includes essential payments like rent, mortgage, loans, utilities and insurance, and all nonessential spending.
Saving might not seem like a lot of fun, but setting aside an amount of money each month can help keep you out of any financial difficulty later on. Working out how to save any money whilst still paying bills and essential spending can be a bit of a headache though. So how can you save money each month?
It’s actually easier than you might think. When you create your budget plan, be as accurate as you can with the amounts you earn and spend. Your budget should detail how much you spend on key expenses and nonessential extras, and being realistic about these amounts will give you a better idea of how much you have left over in your budget every month.
When it comes to saving money, even small changes make a big difference. Things like turning the heating down a little and switching electrical appliances off after you’ve used them helps save plenty of pounds that’ll add up at the end of the month. And you can make even smaller changes to save loads of money, like skipping that nice takeaway coffee you pick up every day. You’ll be surprised by just how much money you save.
With the bigger things like gas and electricity, it often doesn’t pay to be loyal to one supplier. Energy providers typically reserve their best deals for new customers, so shop around to find a cheaper deal elsewhere. You can use comparison sites like MoneySupermarket and uSwitch to quickly and easily see the cheapest offers on the market - and if you find a better deal, switch.
Organising your debts is also a great way of helping you save money. If you have multiple debts (particularly on credit cards) then these will take up a large chunk of your monthly expenditure. But if you prioritise paying off the card or loan that charges the highest amount of interest, you’ll avoid building up interest - and more debt. Alternatively think about consolidating your debts into one loan – this may require lower regular repayments freeing up some money each month for you to save.