If the amount in your bank account is looking a little low at the end of every month, it could be time to restructure your finances.
The simplest way to control your spending is to build a realistic household budget – and stick to it. But often this is easier said than done, and you might need a few more tricks up your sleeve to help you manage your budget successfully in the long term.
That’s why we’ve put together a list of strategies to help make budgeting a breeze.
1. Track your spending
We don’t mean keeping a rough eye on how much you’re spending on a night out or on your weekly shop — it’s far too easy to over or under-estimate how much cash you’re splashing.
We mean tracking everything. Whether you use cash or card, jot down exactly how much you’ve spent and on what. You could go for the traditional pen and paper, an online spreadsheet or an app on your phone (budgeting apps such as Plum or Money Dashboard could be useful), just make sure every penny is accounted for.
It might seem a bit OTT, but tracking your transactions is the simplest way to hold yourself accountable. You can spot unnecessary purchases, patterns in your buying habits and much more by having a written log of your spending.
Top tip: If you struggle to stick to your spending limit, leave your card at home when you go shopping. If you force yourself to pay using cash, you’ll only spend what you have in your pocket so there’s no way you can go over budget.
2. Monitor your bank statements
Check over your bank statements each month so you’re aware of what’s coming in and what’s going out of your account.
It’s great if you’re tracking your day-to-day spending, but what about regular bills and subscriptions? Review your debit and credit card statements and identify ways to make changes which will help your money to go further.
Monitoring your bank statements also helps to guarantee that all your key transactions have been processed correctly and that no questionable or fraudulent activity has occurred.
3. Reduce your bills
So you’ve had a look at where your money’s going every month. Now it’s time to make some changes. This can be split into three stages:
- Find better deals
You may not be getting the best deal on packages such as your phone, internet, or TV – so why not give your provider a call to see if they can offer you a better one?
This works especially well towards renewal time when, if you don’t feel like you’re getting a fair deal, you have the choice to walk away and potentially find a better deal elsewhere as a new customer.
Top tip: Add a calendar reminder when your contracts are due to end, which will give you time to check for a better deal without letting your contract lapse or automatically renew (potentially at a higher price).
- Cancel unnecessary subscriptions
When reviewing your bank statement, you might find a few lingering subscriptions you no longer use. You’d be surprised by how many people forget about their trial subscriptions, which ends up turning into an unnecessary monthly expense. Take the time to cancel any direct debits for services you don’t need.
- Curb day-to-day splurging
Little amounts do add up, so review your leisure spending to see where you can cut back. We all love a good takeaway, pampering sessions, and that morning coffee – but you might need to view these things as a special treat, rather than a regular expense.
4. Tackle your debts
Existing debts can drain your budget if they’re not dealt with effectively. High-interest debt should be treated as a top priority, such as credit cards if you don’t have any 0% offers. According to NimbleFins, the average credit card interest rate in the UK is 22.2%, so even a relatively low balance could cost you more in the long term.
List out all your existing debts, including the interest rate and term length. Give your immediate attention to the one with the highest APR, as paying off high-interest debt will save you paying pricey interest rates.
There’s also the option to consolidate your debt using a personal loan. Simply apply for a loan for the amount you need to pay off all existing debts. Then, with all your debt combined into one easy-to-manage loan, all you need to do is make fixed-rate monthly repayments until your debt’s settled.
5. Make your budget
Once you’ve followed steps 1-4, it’s time to make your budget.
First, let’s start by adding up everything you spend in a typical month. Take that amount away from your monthly income, which should leave you with the amount of money you’ll have left over. From this, you’ll be able to decide whether you need to cut down your spending even more or if it’s time to try and find additional income, such as making a bit of extra cash from your hobbies.
It’s always a good idea to have some disposable income left at the end of every month too. But don’t view this as money to spend frivolously. You might come across unexpected bills or one-off expenses in the future, so it’s a good idea to save what you can when you can.
6. Re-assess your budget
You know what money’s coming in, and you know what money’s coming out, so you have a clear idea of how much you have to play with. This is great, as you’ll be able to budget effectively and make sure you’re spending within your means.
That said, personal and financial situations do change, and you’ll need to review your budget on a regular basis to make sure it still works for your circumstances.
Whether you receive a rise, cut your working hours or see your bills start to increase, your budget should always be updated to reflect any changes. This will help you to stay on top of your finances.
Getting your finances on track doesn’t mean giving up on your dreams
Big purchases are an inevitable part of life. Whether you need a new boiler or you want to make the most of time with your family by booking a holiday you’ll never forget, we know that spending sensibly and managing your budget doesn’t always leave much room to save up.
To help you achieve your goals sooner, why not consider a Novuna Personal Finance personal loan? Get the funds you need upfront, and simply pay the loan back over a series of fixed-rate monthly instalments.
Borrow between £1,000-£35,000 with rates from as low as 7.4% APR Representative (£7,500-£25,000).
Robert Walton is a Senior Marketing Manager with many years of experience helping brands reach the right customers through clear, informative and straight-to-the-point comms. He's all about delivering top quality customer service and shouting about the great things we do here at Novuna. In his spare time, Robert dabbles with DIY and likes to write about his home improvement tips and tricks.
Wednesday 8th February 2023