Getting to grips with your finances doesn’t have to be daunting, Here are our suggestions for getting started.
It may seem obvious but spend less than you earn. Work out your monthly income: this includes your salary or wages, any maintenance or other regular payments, interest from savings and income from investments. Only include regular income that you know you will receive.
Track how much you spend
Write down how much you and your household spend and on what. Include everything, from your mortgage and insurance to a sandwich at lunchtime and a drink after work. Check it weekly – it will be less daunting than doing it monthly. You will soon start noticing fluctuations in the amounts you spend on regular purchases – work out why they have increased or decreased.
Limit regular payments
Some regular payments are essential, for instance council tax and utility bills. However, the more that goes out of your account each month automatically, the less you have to spend on items of your choice. Do you really need those subscriptions, even if they only cost a few pounds a month each?
Work out what is important to you
Deciding what you really want will help you spend less on things that could prevent you achieving that. So, for instance, if you want to have enough for the deposit on your first home or you would really like to take a year off when you hit fifty, you may find that eating out so often becomes less important to you.
Make your progress visible
Think of the amount you are going to save as an expense. Don’t wait to see how much you have left over at the end of the month. Set up a regular payment to transfer a fixed amount each month to a savings account. As well as making sure that you do actually save, this also makes it easier to check on your progress.
Allow yourself some fun
Your monthly expenditure should include some “fun” money, for you to spend on whatever takes your fancy. That way you won’t be tempted to dip in to or “borrow from” your savings.