Three ways to strategize for financial success.
Budgeting is a crucial part of managing your personal finances and staying on track of your spending. By budgeting your essential monthly costs, you can stay on target and avoid overspending, which can often cause panic later on down the line if an emergency cost should arise. Budgeting involves simply setting some goals, keeping on eye on your spending and picking a method that suits your organizational style. Still not sure where you’re going wrong? Follow our quick tips to getting started with budget planning.
Use a budget planner
Start by using budget planner, of which there are different types. Some people prefer buying a physical planner from a stationary shop, as they often include ready made categories and budgeting tips. It’s easy to make your own using a notebook, ruler and a pencil by making a grid with each spending category at the top.
Key things your budget should include are household bills, weekly food shopping, leisure and travel costs. Make sure you add in any extras if required, such as pet expenses or payments on credit cards or loans. If you prefer to store your budget planner on your computer, create an Excel spreadsheet using the same method as the paper planner. Another option is to use an online budget planner or app – you can find one created by the Money Advice Service here.
Look into how you can reduce your spending
Consider how you can reduce your current spending by analysing your budget for obvious ways to cut costs, and keeping up to date with money saving tips and tricks. You may be surprised to find you’ve been unnecessarily splashing out on things you can easily cut back on, such as food, travel and entertainment. These areas tend to be where most people end up spending a lot of their hard-earned cash, so a combination of meal planning to reduce your food costs and checking out the latest budgeting hacks for free or cheap entertainment can end up saving you a significant amount of money.
Once you have found a system that works for you and changed your spending habits, you can revisit your budget to work out how much money you now have left after all your other expenses are covered. Using your planner, calculate how much of your wage is spent on bills, travel and rent. Add this up so you have a total figure for your household bills and take it away from your total monthly wage. Then add up your other essential expenses like food shopping and travel. Once you’ve calculated your essential costs, add your bills and essentials figures together. Take them away from your total wage to check how much money you have left over. If you need to cut spending any more, then go back to those tips and tricks for more ideas.
As mentioned above, meal planning ensures you know exactly how much of your money you need to set aside for food, and can help you save money on your food shop, too. Simply plan each meal for the week, trying to incorporate the same ingredients in different combinations to keep costs low and stick to a total weekly budget. Do one big weekly shop, too – regular trips to the supermarket often mean you end up spending more than you planned, which all adds up. Plus, online shopping allows you to compare prices of each product quickly, making it easy to make cost effective choices and pick the cheapest supermarket overall for your shop.
Meal planning also allows you to reuse ingredients instead of using them for a single recipe, then throwing the rest away or putting it in a cupboard. This helps when you’re cutting down on spending, and will keep your food waste low, too. If you aren’t sure where to start, you can find a meal planning guide for beginners here.
Once you’ve got your budget in place and have some money left over every month, make sure you put some of it aside every month to save. Start with a small amount and build up the figure as you tweak your budget using the tips previously mentioned as time goes on. Watching your savings grow is great motivation to stick to your budget, so now all you need to do is decide what you’re saving for!