Budgeting is something we all need to do regardless of how much we earn or how much money is coming into our household. It’s so important that we take responsibility for our financial situation. If you are in debt there is even more need not to bury your head in the sand, no matter how tempting that is, and find out your exact financial situation. It is only from a position of complete understanding and clarity that we can move forward and have a healthy relationship with money. Here are our top 3 budgeting tips you need to know about.
1. Borrowing money
If you need to borrow money it is imperative to look at the APR and do some calculations to see how much you will actually pay back over the full term of the loan.
There are more options than just using your local bank, such as using a direct lender, like Polar Credit. This is a credit line that works like a credit card and can work really well in many cases. Make sure you have a solid plan for paying it back and keep monitoring it so that you don’t go off course.
Write down every single bill that comes out of your bank account, including standing orders and costs which vary such as petrol, rail travel or food. It is only by analysing this data that you can work out how much is remaining. This ‘disposable income’ is not necessarily what you have left to spend. From this amount, no matter how small, you should start establishing an emergency fund which you pay into each month. It is also worth thinking about paying extra into your pension pot to safeguard your pension as well as your home. From a forward planning view, even making an overpayment of £100 a month on your mortgage will bring your term down.
By staying on top of your finances and establishing a budget which you look at and update frequently you will also be able to make some cutbacks to free up more money. There’s no doubt that a huge number of us have subscriptions to a wide variety of things which we no longer need. It may be that it’s a gym membership, a television channel subscription or even a magazine subscription. You might think you know exactly what is coming out of your bank account but actually sitting down and doing an inventory will really help and very often you’ll spot something you missed!
Make the time to trim these back so that you can channel your money where you need it to go. Be particularly wary of signing up with a 7 day free trial! These have a tendency to be forgotten about and end up costing a substantial amount over the course of a year.
I hope you found these budgeting tips useful? Honestly I know it can feel difficult to budgeting if you have never done it before or if you haven’t done it for a while, but once you get into the swing of things, it can actually be quite productive! If you have any tips of your own which you would like to share, please do get in contact. Good luck!