A beginner’s guide to budgeting
Budgeting can feel like a daunting prospect for some, if you haven’t paid attention to your bank account each month actually looking at how much you have left midway through could have you spiraling into a pit of despair – but it doesn’t have to be this way!
If you’re new to budgeting, here’s how to get started instead of burying your head in the sand and watching the numbers tick over into the minus moments after the bills come out.
1. Take a good look at your finances
First, you need to take some time to actually go through your finances and ensure you know what is coming out each month. No doubt you’ll discover a direct debit you forgot you were paying out for and no longer need (aka that gym membership you took out last January) or you’ll be horrified by the amount you spend in Tesco every week (you know, when ‘nipping in’ to the shop turns into a £20 spree each time).
It’s time to understand where your money is going and how you can get more for it. Jot down how much your bill outgoings are at the start of the month, then make predictions for how much you want to spend on food and petrol etc. (the important things) – this will give you a clear budget to stick to. But there’s more to this than saying what you want to spend and then going out and doing it; you need to find ways to cut back on costs so you can get more for your pennies.
2. Download a budgeting app
An app can really help when it comes to budgeting. It might seem a little fiddly at first as you set up all the categories and get the right amounts put in but an app such as Spending is great because you can input exactly what that money went towards to keep track.
3. Get a better deal
It’s now time to make the most of the money you already have. This means finding better deals on things you’re already paying for such as your car insurance or your energy supplier. Browse the comparison sites and you’ll definitely find a better deal that you can switch to. It’s free to swap energy suppliers but bear in mind there might be a fee when it comes to changing your insurance halfway through a 12-month contract.
4. Cut back on the luxuries (oh, and the non luxury items)
Now, when it comes to budgeting money needs to be saved somewhere and we’re sorry to say that you’re going to have to refrain from buying that coffee on the way to work or picking up a Pret lunch every day. All of these things add up (a coffee every day, at £2.80, is going to cost you a whopping £728 a year) so it’s important you cut them out when it comes to budgeting.
However, cutting back also applies to things like your weekly food shop. If you can cut out big brands and buy in bulk to prep meals for the week you can save a few more pennies to add to your budget – and perhaps include in your savings.
Ensure you tackle your budget now if you’re struggling to manage money. Check on your debts too – credit cards and store cards count – and if you’re struggling, reach out to a company such as PayPlan for advice on how to tackle these while living with a strict budget.
