Money problems are a common issue for many households.
When you’re struggling to make ends meet month after month, it’s tempting to assume that the root cause of your problems is an income that’s too low, and bills that are too high. While it’s fair to say that the economy isn’t in the best shape right now, it’s also worth noting that most families are overspending without even realising it.
When you don’t have a budget or money management strategy in place, it’s easy to forget that those once-a-week pizzas and daily coffees at work quickly add up to a lot of wasted money at the end of each year. Controlling your finances starts with figuring out how you’re currently spending, and where you can adjust your habits to facilitate future success. Here are a few tips that will help to make sure your money goes further each month.
Know Your Incoming and Outgoing Expenses
Knowledge is power. When you want to improve your spending habits, the first thing you need to do is look at how much cash you have coming in each month, and how much you have going out. Get a few bank statements from the last couple of months and figure out exactly where you’re spending your money. Once you can see all your outgoing expenses, organise them into different categories like:
- Bills and essentials
- Entertainment and fun
- Food and household/hygiene products
- Savings and retirement
If you find that you’re spending £50 a week on entertainment, but nothing on saving for the future, you can start to change your habits to suit your new goals. Checking your outgoing expenses will also help you to pinpoint any unnecessary bills for subscriptions you don’t need or services you don’t use anymore.
Build One-Time Expenses into your Budget
Though budgeting is a great way to handle your financial situation more effectively, many families and individuals struggle with keeping their budget records accurate. The trouble is that it’s easy to remember that you need to set money aside for gas and electricity bills, rent, mortgage fees and food, but it’s not so easy to remember that you need cash for back to school supplies in September, new winter coats in October, and gifts for birthdays in the spring.
Look at your calendar when you’re working on your budget each month and remember to set money aside for those one-off expenses too. If you’re not sure what lies ahead each month, a small “just in case” fund could be a great way to keep your savings protected.
3. Use Cash to Keep Spending Under Control
Putting a cap on your spending in certain areas is one thing but sticking to that restriction is something else entirely. It’s easy to tell yourself that you only have £50 a week to spend on groceries, but when you go to the store and see some great deals on items you didn’t plan for, you might decide that it’s not too big of a deal to go up to £60 or £65 one week instead.
Unfortunately, poor discipline is the bane of good budgeting. If you have trouble sticking to your limits when a credit card or debit card is involved, switch to using cash instead. Write out a list of items you need every time you go shopping and take just enough money to cover those expenses. That way, you’ll be forced to return home and think carefully about any extraneous purchases. This should keep impulse shopping to a minimum.
Look for Different Ways to Save
Finally, remember that budgeting isn’t just about cutting down on the things you enjoy every month. While getting your budget back into shape might mean that you need to compromise in some places, there are plenty of ways that you can reduce the amount you spend, without giving up on the things you love. For instance, switching your gas or electricity supplier could save you a serious amount of money every month.
If you don’t use your house phone and watch Netflix instead of television, then getting rid of your TV and phone package can help you to cut costs too. At the same time, you can always commit to searching for coupons and voucher codes before you make any big purchases to keep costs low. Being a savvy spender ensures that you can continue to have fun in your everyday life while preparing to achieve your goals in the future.
This is a collaborated post