Some of us are better at managing our money than others. Everyone is different, which means we all fall on a spectrum which ranges between thrifty savers and impulse buyers. But with many of us feeling the effects of the rise in living costs, it’s vital that we find ways to make our finances go further.
But that’s easier said than done, and putting the theory into practice is no mean feat. So, what steps can you take to budget more effectively? Here are a few handy tips to help you out.
Track your spending patterns
The first thing you need to do is gain an understanding of where your money is going. Take the time to sit down and do some basic calculations of how much your incomings and outgoings amount to. The next step is to break those down individually, making a note of how much you spend on mortgage/rent payments, household bills, travel, food etc. This will give you a clear picture of how much it costs to cover the essentials each month.
Cut out any unnecessary expenses
During the above process, chances are you’ll identify a couple of areas where you could stand to make some savings. For example, are you paying for a gym membership or a satellite television subscription that you rarely use? Over the course of a year, these expenses can equate to hundreds of pounds.
Set yourself some goals
The key to setting financial goals is making them realistic and achievable. For example, you’re not going to be able to swan off into early retirement in your 40s by putting aside a little spare cash into savings every month. But you can define smaller targets that will offer a great sense of satisfaction and accomplishment when you meet them.
Get into the habit of saving
One of your goals could involve opening a savings account and depositing a set amount each month. You could set up a direct debit into this account on the same day you receive your salary so that the funds automatically transfer before you have a chance to spend them. It doesn’t have to be a huge amount – you need to make sure you have enough to cover the essentials – but it can soon build up over time.
Seek cheaper alternatives
You can also make a few simple lifestyle changes that will help you to save. For example, you can start to buy own-brand products from the supermarket rather than those from the bigger, more expensive names. You can also take the time to shop around when it comes to energy and insurance providers. Don’t be tempted to simply stick with your existing companies – you may be able to find better deals elsewhere by using comparison sites.
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