Lets Talk About Budgeting
Are You Currently Spending More Than You Earn?
You wouldn’t be alone. It’s a familiar story across the UK. While it can be enjoyable living for the here and now, those who continue along this path can find themselves in a downward spiral eventually. One from which it is hard to escape. It’s crucial you find a way to balance your budget to avoid falling in to financial hardship. Here are a few handy tips when it comes to managing your money.
1. Bills, Bills, Bills
They’re as inevitable as night following day. They can’t be avoided, but bills for essential services are a great area to start when looking to cut down your monthly spend. Changing service provider will not affect your standard of living, but may result in extra cash in your pocket when it comes to the end of the month. Taking gas and electricity as a start, staying with the same supplier year after year could mean you are missing out on introductory tariff’s for new customers with alternative providers. According to Which?, the average yearly saving for customers who switched their energy supplier between January and April of 2015 was £301. The process is very straight forward and is an obvious place to start when taking the step towards making your ends meet.
This does not just apply to energy suppliers. You can haggle with phone and internet providers, car insurance providers, home insurance providers, and anyone else to whom you pay for a service. It really does pay to shop around.
2. Cutting the Cost of Borrowing
If you are spending more than you earn, you will have more than likely taken out some kind of credit in the process. Further borrowing will probably have added to the gap between your income and your outgoings, and debt accrued on credit cards is likely to be a major drain on your resources. Ask yourself the question, “did I get the best value on my borrowing?” Standard credit card balances are likely to be subject to an interest rate of up to 20%. Shop around for deals on 0% balance transfers. Not having interest applied to your card balances will help speed up the process of getting them paid off. Although it is important to have a clear plan to pay off the balance before the deal period ends.
Another option is to consolidate using a personal loan. Having a set payment amount over a fixed period of time is perfect for budgeting purposes, but while this can be a great solution, don’t fall in to the trap when it comes to your credit cards. It can be tempting to start spending again on the cards which will do nothing except put you in an even worse position than before. Cut them up and close the accounts! You’ll be better in the long run, and more importantly you’ll be one step closer to living within your means.
3. A Bit of What You Fancy
As the old adage goes “A bit of what you fancy does you good”, only it doesn’t if you don’t have the money to spend on what you fancy in the first place. We all need that leisure time, and retail therapy to brighten our lives, but this shouldn’t come at the cost of a financial car crash. You should only be spending your disposable income on luxuries when your income is truly disposable. You might be surprised at how much you are spending on one off purchases, or eating out. Which brings us to the next point…
4. Write it Down!
Pen and paper, spreadsheet, budgeting software, it really doesn’t matter which! Just make sure you write down all of your income, and all of your outgoings. Only then will you be able to get a true picture of where you stand. You can identify areas to cut back, and also see in black and white just how many changes you need to make to get in to the black. Places like www.moneysavingexpert.com, and www.moneyadviceservice.org.uk have online budget planners allowing you to write down every expense to work out your current position. From here, you can start to create your plan of attack.
5. Ask for Help
If after all the above points have been exhausted, you still can’t get your budget to add up, it’s time to ask for help. The Money Advice Service has lots of information on dealing with unaffordable debt, as well as information on places to get free debt advice and help. Do it sooner rather than later. The problem isn’t going to go away, but facing up to it early can give you the best chance of getting back on to a sound financial footing as quickly as possible.