It’s that time of year when we start to really analyse what we are spending and looking at where our money goes. Here is a list of tips and tricks to ensure you remain financially healthy going into the year ahead.
Becoming More Financially Savvy
You don’t have to earn loads or be a maths genius to be good with money. It’s more about knowing how to avoid debt, how to work with the money you have and understanding the short and long-term consequences of your actions.
Many of us have poor financial skills because it’s not taught in school and it’s not instinctive. If you’re struggling each month despite working, or if you know you have to cope with not much money, then having money-smarts can take you a long way; find out more here.
Don’t just hand over your card
Never make a purchase, especially a large one, without looking at your finances to see how it’ll affect them. Do you have enough money spare to buy the item with? How much money is already committed to next month’s outgoings? You should even do this with small purchases; is this the 15th coffee you’ve bought this month? At £3, that’s £45 you’ve spent so far… It really does add up.
Always have a budget
Most people find budgeting boring – it’s just compiling a list of what you’ll be spending money on and doing sums. However, if you have a history of poor finances then you don’t really have any excuse not to spend a couple of hours each month doing those sums. And knowing how your budget all fits together is great for financial health.Â
Always use the budget
There’s no point spending that time on your budget if you promptly forget about it. You need to have it in a handy, portable format so you can refer to it while you’re out shopping or talking about holiday plans. You also need to make changes to it as bills go out or your plans change.
Keep tabs on your spending
If you don’t keep track of your purchases, then the small ones add up and can make you overrun your budget before you realise it. There’ll also be something that you spend too much on every month – bottled water, coffee, lip salves… Keeping a record of your spends can help you to pin down these sinkholes and take preventative action.
Think carefully before you take on any new bills
Just because you can afford it doesn’t mean you should! A TV subscription here, an organic veg box… Before you know it, you’ve committed an extra £60 each month, which is £720 a year. Plus, the chances are that you don’t use every item in the veg box and you forget about the TV subscription after a couple of months. Make sure subscriptions are things you really need, and you you sign up for a gym, use it!!
Always make sure you’re getting the best price
Always, always look for the vouchers, the discounts and the coupons. Phone up utility providers to see if they’ll cut you a deal and always explore unbranded or last year’s options as they’ll be cheaper.
Save up for the bigger purchases
If you can defer a big purchase and save some money towards it then do so. Even if you only manage to save up half the price and put the rest on a credit card, it’s an improvement on putting the entire amount on your card, right? Delaying the purchase also gives you time to look for a cheaper option or to wait for a price reduction. You’ll also be paying less interest on that card balance.
Make regular savings deposits
Even if you can only manage £10 each month, that money is in your account, working for you for the years to come. Whenever you get a pay rise or a windfall, commit at least 40% of it to your savings, unless, of course, you really need the extra money for essentials.Â