Are you struggling to get on top of your finances? With the UK in the midst of a cost-of-living crisis driven by rising inflation, households across England and beyond will be looking for ways to manage money better.
While there’s little we can do about rising costs right now, it is possible to make your finances go further. So where do you start?
Below, we’ve outlined five key tips for managing your money more effectively.
Create a robust budget
If you don’t already have a budget, now’s the time to make one. This means noting down all your committed monthly outgoings and subtracting them from your income to see how much you’re left with for discretionary spending and saving. If your income works out as less than your overall outgoings, then something needs to change.
You can start a budget using a spreadsheet, a mobile app or good old-fashioned pen and paper. It’s easier to edit and update digital versions though.
Build your savings
It’s smart to put at least some money into savings each month. While there’s no golden number to aim for, it’s commonly recommended to save 20% of your income if you have the means to do so.
Having savings can come in handy for a wide range of short and long-term goals, from car repairs to house deposits. Just make sure you’re using a savings account with a healthy interest rate.
Clear debts
Do you have outstanding debts which are draining your finances? Debts range all the way from mortgages to phone bills and the more you have the trickier it is to pay them off, so make sure you have a clear plan of how you can pay them off each month.
If you have an outstanding high interest loan, you could use a lower interest online loan to make the full repayment. This will allow you to switch to a lower interest, more manageable debt.
Pay bills on time
Paying bills on time is important for building a good credit score and avoiding spiralling debt. From mortgage or rent to council tax, gas and water, setting up scheduled payments is the easiest way to do this.
If you earn a fixed income, it can be helpful to schedule these payments to come out just after your salary lands. This way you can’t overspend elsewhere first.
Cut back spending
Almost everything is more expensive right now, from fuel to furniture and fresh food. It makes sense, then, to look for areas you can cut back in while still enjoying a good quality of life.
Common areas to target include travel, meals out and insurance. Unused subscriptions like gym memberships and TV streaming platforms are other options worth culling if you’re not getting value out of them.
If you can cover all these points, you’ll soon start feeling more confident about your finances.
