- Personal Finance
Simple Budgeting tips that help in the recession
Needing a Budget Health Check?
This is not a get rich quick scheme, it is simply about good old fashioned budgeting. If you think back to the time of your grandma or to some even you great- grandma, they got by through budgeting.
How many people go into the supermarket and get what they need or like without actually knowing what individual prices would be? Whole television programmes like "Eating well for less" are being made as people have got into the habit of ready made and processed food out of convenience. Credit cards are just so easy that people sometimes lose track of their spending.
I sometimes help people with budgets and it is not unusual for someone to not know what their monthly expenses are.
Here are some helpful tips
Take the time to sit down and make a budget. - Do you actually know if your income is more than your expenditure? There are a variety of free online resources that will help you think about your budget. Sit down and work it out what your essentials are. It will help you see what you are spending and highlight where you can make small changes.
When making your budget make it realistic. There is absolutely no point in guessing loads of your expenditure. If you really want to tackle your finances you have to be honest about what you spend on.
Try tracking your spending for a week or a month. We all know that it is far too easy to go to the ATM, get cash out... then a few days later think "What did I spend it on?" Take the time to track where the money goes. Stewardship has a record sheet on their site. You may actually be surprised at where it all goes. You could even try just using cash for a month. Work out what you think you will need and stick to it.
Check out some price comparison websites, to see if you can save on your utility bills. Sites like Uswitch or comparethemarket can help you to check whether your utility current supplier is the cheapest or not. Even £20 a month is £240 a year. Paying higher than you need to can make a significant difference to your annual outgoings. Insurances are another thing to check. So many rely on their ability to auto renew policies. Sometimes you can save a lot by shopping around.
Check what the interest rates are on your credit cards. This may seem like an obvious thing to suggest but again you would be surprised at the number of people that have no real idea what interest they pay or the impact that has on there overall debt. If possible pay credit cards off at the end of the month and always try to give more than the minimum payment.
Avoid Store cards unless you can pay them off at the end of each month. Store cards tend to have high interest rates. (some as high as 27.9%) Like most plastic it may give you a special offer or a little time to pay but if you are the type of person that only pays the minimum, then the interest rate can add so much more onto the final cost.
You can save money by taking a pack lunch to work. We have probably all been guilty of this at some stage, you can't be bothered to think about lunch for work, so you nip out to Boots or Costa or Starbucks for a sandwich. There is nothing wrong with that but you probably spend at least £4 a day doing that. That's £20 a week (if you only work 5 days) and £80 a month. If you do need to cost cut, taking a pack lunch to work is often a good place to start.
Make a shopping list and stick to it. I am what you call a "grazer shopper" I am terrible at having a look and then adding something into the trolley. I find if I write the things down that I need, I tick them off my list and head to the check out once I am finished. If I don't make a list, I roam around the shop (rather than going to specific aisles) and find that my trolley has a few "extra" items by the time I get to the check out.
If you have budget stick with it - It is so easy to go to the shops and come back with 5 items instead of 2. If you want to avoid this, you could try a couple of things. If you are going to the local shop for bread and milk, only take the money you need with you. (If necessary leave the purse behind.) Another thing to do is if you decide you want a treat and will go over your budget getting it - look in your trolley and see if you can put something back.
Back in grandmas's time there were money boxes with several slots to help budget. If you don't have one of these another way to do this is having envelopes with the name on it e.g rent. It does take self control but it helps to plan.
Tips if you are in Debt.
Make sure you pay the essentials first (mortgage/rent, electricity and gas)
Pay off the things with the highest interest rate first. - If you have a card that has 18% interest and one at 6% for example. Pay a minimum payment to the 6% card and put as much as you can to the one at 18% to clear that card first, it will save you money in the long run.
Don't pay for financial advice. There are lots of place that will give you free financial advice. CAB, Consumer credit counselling service or independent advisers. If you are in debt the last thing you need is to pay out for advice.
There is no need to be ashamed and don't stick you head in the sand. It's better to face the problem head on.