We all struggle to keep our hands on the pennies every now and then. So to ease your money worries and your overdraft woes, check back the first Friday of every month for a series of little hints on tips on how to make your moolah stretch further or work harder for you.
January is as good a time as any to take stock, forward plan and have a long hard look at personal finance. Your own, preferably. Whilst we all begin the year with great intentions, I usually find that the Christmas rush of around November/December (coupled with very depressing weather) makes me throw any budget out the window and spend money like Nicki Minaj in a wig shop.
It might not be the most exciting way to spend a weekend, but now is the time to get your finances in order – what you are spending, what you are saving and really thinking about where all your hard-earned cash goes. This won’t all happen by accident. You need a plan, and like batman I have a suitably whizzy formula for getting you on the road to budget heaven.
Blast your budget
As boring as it sounds, now is the time to get your spreadsheets ready and make a money plan for the year, fast. If you prefer to live on the edge and just wait until the cash machine stops spitting out tenners and starts swallowing your debit card, now is the time to rethink that strategy with a little personal finance planning trick called budgeting.
It is really easy to do, so easy I’ll give you some handy bullet points to get started:
- On a spreadsheet, list all the money you have coming in – wages, freelance work etc and total it.
- Underneath, list all your outgoings – don’t miss the big stuff like rent/bills, travel (although that comes out of my pay packet before I see it), loan/credit card repayments, memberships, phone contract and insurance.
- Subtract the outgoing from what you have coming in and ta-da – you have your monthly amount left to spend.
I actually do this twice – once for my personal account, and once for the house account which has all the household bills etc attached to it.
Keep track of your spends
Once you have your amount left over there might be other things you want to do with it (see below for savings), but a good place to start would be to keep track of your spending for a while by entering everything you spend on your spreadsheet, or using an app like Budget Planner or Pocket Budget.
One of the first rules of good personal finance is to not spend more than you have, so using an app or tool to keep track of your spending is great – it puts you in control of your money and means you can make purchasing decisions based on how much you actually have to spend.
You might like to split your spending money by weeks, or by category, Working out what you spend most on after 2-3 months will help you do this.
Clean up your outgoings
It’s easy to do, but often we sign up for stuff via direct debit or standing order and never really think about it again. The money just comes out of our bank account regularly, and unless you are tracking your spending or logging on to online banking often, it is easy to miss.
Every 6 months I log on to online banking (I really feel having up to the minute access to your accounts is crucial, so if you don’t have online banking yet, talk to your bank) and check my direct debits. Often I’ll find magazine subscription costs for stuff I don’t read any more, or an old standing order for insurance that I forgot to cancel – not wasting money on stuff you don’t have access to any more is a major win in the perosnal finance battle.
Make savings savvy
Everyone should open a savings account – even if you don’t have much to save, every little counts. At the very least, everyone is entitles to open a cash ISA account which gives your tax free interest (free money!) on all balances up to £5640 per year. You can search for the best cash ISA accounts and open one really easily.
Whichever method you decide, it is really important that you add your savings amount to your monthly budget and make an effort to stick to it. You might be saving for birthdays or Christmas, a holiday, a house (like me!) or just a rainy day but having a little cushion to fall back on is really helpful.
What are your best personal finance tips?
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