How to Budget Better: 2024 Guide
Setting a budget can help you to become more aware of your spending and critique your habits. You may notice that you’re spending money on things you don’t need, and not saving money where you can! Follow these simple tips to budget better, spend less and save more!
6 Steps to Better Budgeting
Once you have a budget in place you’ll be able to manage your money more effectively which in turn will help you plan for the future and achieve your financial goals.
How to Budget Better
Understand your incomings
Do you know what you earn? Keeping a record of what’s coming in is something you should be doing anyway. Recording your income will be super useful when you’re asked to prove your income – for example when applying for a mortgage.
An easy way to keep a record of your monthly earnings is by regularly updating your income on spreadsheet.
Know your outgoings
Tally up all the different bills you have to pay. Don’t forget mortgage/rent, utilities, insurance, groceries, car payments, phone contracts, Internet/TV service, etc. Add them all up and make sure the money coming in is more than what’s going out… if it’s not, you’re going to need to find a way to reduce your outgoings!
This is also a good opportunity to review your bills, could you switch to a cheaper energy provider? Are you spending money on things you don’t need? Review every transaction and consider if it’s possible for you to get a better deal. Compare broadband and TV deals to reduce your monthly outgoings / expenses.
HSBC have a great app called Balance After Bills, which shows you how much you’ll have left once your regular bills and payments have come out of your account. Being conscious of your outgoings in relation to your income will help improve your financial fitness.
Prioritise debt
Paying off existing debt should be a priority. Debts (usually) cost more than savings earn. For your wallets sake follow this simple steps to take back control over your debts. Prioritise the most expensive debts (use any savings you have to pay these off).
Check to see if you can lower any of your debts’ interest rates. Consider a balance transfer; with a balance transfer you get a new card to pay off debt, at 0% interest/a small fee – meaning that you have longer to pay off your debt without paying the added interest.
You can write off 75% of your debt with a new government scheme called Individual Voluntary Arrangement (you may qualify if your debts are over £1,700 and you have more than one debt). If you’re being contacted by a debt collector like Wescot Glasgow for example, be aware that they have guidelines that they must follow including:
- No use of aggressive practices (coercion,
or deceit for example) - Be transparent and provide clear information that is not misleading
- Be considerate towards debtors experiencing difficulty
If you are being intimidated by debt collectors who are not abiding by these guidelines, then you have a good case for reporting them to the Office for Fair Trading.
If debt is holding you back, speak to a free debt advice expert at StepChange.
Plan big expenses early
If you like to spend big at Christmas or birthdays factor this into your budget early. Start saving a manageable amount each month so that these occasions don’t set your finances back. One of the most sensible things you can do for your finances is saving up an emergency fund. This will help you cover the cost of unexpected costs.
Depending on your circumstances there are extra things you could consider. Here are some helpful tips to getting your family budget in order.
Reduce non-essential spending
If we’re honest we all buy things we don’t need from time to time. But for the sake of your budget you need to reduce your non-essential spending.
Look for cheaper or free food alternatives to reduce your wasteful spending! But how much are you spending on ongoing contacts that you don’t need such as streaming services, entertainment packages, and gym memberships?
Do you know if you are entitled to any discounts? Do you qualify for any benefits or schemes? Getting what you are entitled to could significantly reduce your outgoings, so if you work for a company that has discounts as company benefits or you have a disability which means you might qualify for some financial help like the NDIS funds, make sure that you have checked.
Save regularly
More often than not your bank will offer you a variety of savings accounts, it’s best to talk to your bank and find out which savings account will work best for you. There are some pretty decent easy-access savings accounts available right now including.
Best Easy Access Savings Accounts
- Chip app 4.84% – open via the Chip app. The bonus which is calculated daily and updated monthly on the account balance.
- Kroo 4.35% – open via the Kroo app + get £10 free after your first purchase.
- Chase 4.1% – As well as 4.1% on savings new users can get 1% cashback on your everyday spending for your first year.
- Monzo 3.7% – (+ £5 bonus for new users). Sign up via the app. Bonus paid monthly
Another option when it comes to saving is to set up various savings pots. I use Monzo for this – I have 4 ‘funds’ that I’m saving towards.
The 50/30/20 budget method
The 50/30/20 budget is a popular budgeting method that divides your income into three categories: needs, wants, and savings:
- 50% of your income should go towards needs, such as housing, transportation, utilities, groceries, and other essential expenses.
- 30% of your income should go towards wants, such as dining out, entertainment, shopping, and other non-essential expenses.
- 20% of your income should go towards savings, such as emergency funds, retirement savings, debt repayment, and other financial goals.
The 50/30/20 budget method is a popular tool for budgeting as it allows you to meet your financial obligations while also enjoying your life and saving for the future.
Increase your income
Side hustles are an increasingly popular way to make money for people who are struggling with their current budget. Some people sell their skills or make products to sell as a sole trader; others even make money through trading!
If you are interested in trading as a side hustle, you can even calculate your profit using the forex profit calculator. This helps you to keep track of what you’re earning through your trading side hustle!
There are tons of ways that you can earn some extra money on the side, I have a full list of these over on my ‘Side Hustles Page‘. Click the link below to find a side hustle that works for you! I have a range of part-time job ideas, work-from-home roles and gigs you can do in your spare time.
More budgeting tips
I’m constantly adding new articles to my blog that should help you save more money, but for some quick inspiration I’d recommend the following articles:
Tips for Reducing Your Energy Bills
Get £5 FREE and Cashback on your Supermarket Shop
Taking the time to set yourself a budget is a brilliant way to gain control over your money. Use the opportunity to review your spending, set yourself goals, and introduce some positive financial habits.