With the cost of living in the UK soaring and wages failing to keep up, controlling your spending and managing your financial budget has never been more vital.
Households across the country understand they’ll need to restructure their finances to accommodate the increased energy bills and National Insurance contributions that will go into effect in April.
The Bank of England has predicted that inflation will exceed 7% this year, with goods prices continuing to grow at the quickest rate in 30 years.
Building and keeping to a realistic household budget will help you stay on track with your spending, so going through all your finances and drafting up your budget, will help put you in a better financial position this year.
To make this process easier, we've compiled a list of five simple strategies to make your new budgeting plan a success.
Track your spending
Make a note of every purchase you make, whether it's the weekly supermarket shop or a quick morning coffee. This is an excellent method for staying on top of your spending and ensuring that your money is going where it should.
It may seem tedious to write everything down, especially if you use cash and can't just check your banking transactions, but it's necessary to know exactly what you're spending.
Tracking all your transactions is the simplest strategy to hold yourself accountable, whether you use a pen and paper, an excel spreadsheet, or a smartphone app.
Top tip - Budgeting apps such as Plum or Money Dashboard make tracking your purchases quick and easy.
Monitor your bank statements
Make it a habit to check over your bank statements monthly so that you are aware of what’s coming in and what’s going out of your account.
By double-checking your accounts and bills, you can guarantee that all your key transactions have been processed correctly and that no questionable or fraudulent activity has occurred.
Reviewing your spending regularly will also help you identify areas where you can make changes to make your money go further, such as unnecessary subscriptions or pricey contacts.
Reduce your bills
After reviewing your bank records and making a list of all your incomings and outgoings, it's time to figure out where you can cut back on your spending.
Call your phone, internet, and tv providers to see if they can offer you a better deal or package - this works especially well towards renewal time, and if you don't feel like you're getting a fair deal, don't be afraid to walk away. You're more likely to get a better bargain elsewhere as a new customer.
Also review your leisure spending to see where you can cut back, including things like takeaways, pampering sessions, and that morning coffee. You'll be surprised at how quickly these costs mount up.
Tackle your debts
Existing debts can be frightening and drain your budget if they are not addressed head on in a realistic manner.
Credit card debt should be treated as a top priority, especially if you don't have any 0% offers. With average credit card APRs of over 20%*, even a relatively low balance could cost you more in the long term.
Begin by listing all your existing debts, including the interest rate and term length. This will help you to prioritise those that require your immediate attention (the one with this highest APR) and the ones that can wait.
Re-assess your budget regularly
Finally, there is no sense in having a budget if it is not reviewed on a regular basis.
We are all aware that personal and financial situations can change, so whether you receive a rise or cut your working hours.
Your budget should always be updated to reflect this change so that you can stay on top of your finances.