How to Budget Better
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!
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. A super easy way to keep a record of your monthly earnings is by creating a monthly budget 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!
Get Rid of Debt
Paying off existing debt is a priority! Pay the debts off before you save! 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.
Look to earn some extra income; consider asking for more hours, getting a part time job, freelancing or research other extra income opportunities.
Reduce Non-essential Outgoings
Lets be honest – we all buy things we don’t need from time to time. For the sake of your budget you need to reduce it! Here’s what most people waste their money on (separated by generations). All three put the most unnecessary cash towards dining out…
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?
Bean is a useful little tool that helped me with this! Bean is a website that tracks all your contacts; highlighting how much you spend on them & helping you to end contracts you don’t use anymore. They also have a niiiicee sign up offer of a £5 Amazon voucher after you’ve had an active account with them for 30 days!
It may be a good idea to keep a record of small spends and extra earnings.
If you don’t want to do this manually, Cleo could be your new best friend! Cleo is an artificial intelligence money-managing assistant that can be accessed through Facebook Messenger, text message, Amazon Alexa or Google Assistant – you can ask it questions relevant to your account and spending habits, and receive instant feedback and advice (super helpful!).
As well as this you can set yourself a budget and Cleo will notify you when your spending is about to send you over your budget! Another perk to signing up with Cleo is the referral scheme. When you first sign up through someones link you’ll be rewarded with £2.50. After that, you’ll get your own unique link that you can share with others and if they sign up (and connect their bank account for more than 7 days) you’ll both get £2.50!
Open a Savings Account
If you’re in debt, I recommend paying off debts before looking into a savings account.
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! If you like the idea of an ‘automatic savings account‘ then carry on reading. Plum is an automatic savings account that analyses your transactions & identifies your regular income, rent, bills & daily spend. Using this data & other factors like your available balance, Plum’s smart algorithm calculates an affordable amount for you to save.
Your savings are then invested at RateSetter; one of the biggest peer-to-peer lenders in the UK. Your 3% interest (on average) accrues for every day that your funds are on loan and is paid monthly as the borrower repays their loan. You always have access to your Plum savings and can withdraw at any time (always allow for 24 hours when withdrawing).
Disclaimer: investing with RateSetter, you are lending your money to a number of people, some of which may not pay back their loans, meaning that your capital may be at risk!
Increase your Income with Side Hustles
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!
Decrease your Spending
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: