Managing money can seem like daunting task. In fact, it’s so scary for some of us that, when failing to manage it properly, we end up in serious trouble. But, it doesn’t have to be this way. You can manage your money effectively, and feel in control of your finances. Here’s how…
1. First, set yourself a budget. Setting yourself a budget is going to take a little bit of effort, but it’s a really good idea as it will give you a clear idea of what’s coming in and what’s going out. Making a budget means you’re less likely to be caught out by day to day costs, as well as unexpected emergencies and will help to keep you out of debt.
The best way to do this is to use a budget planner. It will require that you know your income after tax, and enable you to see you how much you’re spending on things like household bills, living costs, debts and travel expenses. At the end, you’ll get to see how much (if anything) is left over, and which areas are costing you most of all.
2. Next, you need to find a way to stick to your budget. If you’re currently spending more than you’re earning, you’ll need to find ways of scaling back your expenses. For instance, you might need to cut down on the amount you eat out of the house, or cancel some TV subscriptions, gym memberships or expensive habits.
Once you’ve scaled back your outgoings so that they’re in line what you’re bringing in, get yourself some apps to help you stay on track. For instance, make sure you have access to online banking, and use a budget tracker app to help you manage your money. The convenience of technology means you’re far more likely to manage your budget properly than if you had to rely on printed bank statements alone!
3. Then, prioritise paying off your debts. It’s not unusual to have some kind of debt, and under some circumstances, a loan is the solution – in fact, the average total debt (including mortgages) per household in the UK in 2015 was £54,296! Good budgeting, however will make room for paying off the debts you owe so that interest doesn’t accumulate, helping you avoid falling into serious financial difficulty. Pay at least the minimum on your credit cards, as well any other loans and your mortgage.
4. Finally, don’t forget to add savings to your budget. It can be really hard to find surplus money at the end of every month, but even £30 a month will amount to a larger sum over time. Pay some money into a separate savings account, however big or small and resist the temptation to dip into it. Savings can be used in emergencies, to top you up when you’re earning less (such as when you’re on maternity or paternity leave), or to help you buy things such as cars without having to take out finance.