With the cost of living increasing, and approaching an expensive time of year, now is as good a time as any to review you budgeting and get your self on track. Here are our 6 top tips to help you set off on the right foot with budgeting and keep yourself in check.
- Income: Make a list of all the money you anticipate you will receive on a regular basis whether that be weekly, monthly, or quarterly. This income could be salary, state benefits, rental income, passive income, or something else entirely.
- Expenditure: When you think of your expenses try splitting these into two lists; essential spending and lifestyle spending. Your list of essential spending should include things that you need to survive on a day-to-day basis; shelter, heating and eating. Your lifestyle spending should include things that you would like to do on a regular basis, but you can survive without, for example a gym membership or a magazine subscription.
- Designate: Most of us receive our income on a regular basis, so to ensure that your essential outgoings are being met in each income period you should designate a bank account for all these outgoings to be paid from. Each time you receive your income move the relevant amount into this designated account to cover your essentials, you should have a separate account for your lifestyle spending, and another for day to day spending. This reduces the risk of overspending accidently as your spending money will be completely separate.
- Timing: If you can, move the Direct Debits and Standing Orders which are taken out of your bank account to a similar date it can make it far easier to keep track of budgeting and spending. Ideally, move all the payments which get taken out of your account to 5 days after you receive your income. It’s best to do 5 days after just in case your income doesn’t arrive when expected, or if pay day falls on a bank holiday so you receive it a little later.
- Save: As part of your budget think about savings too. We see it all too often when people say ‘what’s left over at the end of the month I’ll save’. If you’ve ever tried this you probably find there is often very little if anything left at the end of the month, if we see it as available to spend, we spend it! When your other regular payments are taken from your account it’s a sensible time to move a set amount to a savings account too, if you take it out at the start of the pay period it’s much less likely that you’ll miss it.
- Review: Review, review, review! It is so important to review both your income and outgoings on a regular basis to ensure there aren’t any unexpected changes. Look out for trends within your spending too, have you got in a bad habit of buying a coffee every morning which is costing you a small fortune? Do you have a little left over each month? Could you increase your savings? By repeating these steps on a regular basis, budgeting will become second nature and you’ll be doing it without even realising.
~Novel Serialisation: Heavens Fire~
By Lukas Spyrou and Emma Knights
Lukas Spyrou and Emma Knights are the next generation of Financial Consultants at Face to Face Finance, Norwich, UK. Co-hosts of The Money Compass podcast where they explain the what’s, how’s and whys of all thing’s money.
They are extremely passionate about working with individuals to start thinking about their financial futures and helping them to implement the right plans to achieve their objectives and ultimately financial freedom.
Visit: https://ftof-finance.co.uk/
Great article. Good tips and ideas.
Really good article. It’s the little things that seem to add up. Like the idea of not leaving it until the end to save.
Really helpful article, I will certainly make some changes and follow these tips.