Understanding how to better manage your money, particularly during the winter season where expenses are generally higher due to the Christmas festivities and increases in bills, is important. Money management doesn’t have to be strict or full of spreadsheets and complicated software – but with just a few small tweaks here and there, you may find money management a simple and easy part of your monthly planning. Here we’re taking a look at some top money management tips to help you!
Making & Managing A Budget
The first tip for money management is setting a budget which will allow you to gain better control of your expenses and understanding where your money is being spent each month. This will allow you to keep track of expenditure but also provide you with a net of how much you can spend on activities outside of your monthly bills and financial obligations.
You may also want to set a specific budget for one-off expenses, such as Christmas or birthday presents, or even holidays and trips. Understanding how much you spend on average on each of these things, dividing it by 12 and then saving that amount each month can help you to save specifically for this without dipping into your everyday savings.
Having a clear spreadsheet can help with this, as you are able to see where every penny is going and allow you to identify where cutbacks can be made and where you are able to be more frivolous.
Handling Financial Emergencies
There may be circumstances that you face which can account to a financial emergency – this could be an unexpected bill, a car breakdown which you need to fix urgently, a water leak or home repair which you haven’t budgeted for due to its unexpected nature. Having a budget and building up your savings can help to cover these expenses.
However, there are other alternatives such as borrowing from friends and family, payday loans or other short term financial assistance, or credit cards which may be able to temporarily cover the cost quickly allowing you to get back on track.
Paying Off Loans and Debt
If you already have loans or credit cards where debt needs to be paid off, then you should consider prioritising this. Loans, credit cards and store cards often have higher rates of interest than other forms of borrowing, and this can quickly build up. You may consider a debt consolidation loan in order to make your repayments far more manageable on a monthly basis if you’ve found this building up over time. Alternatively, if you are able to overpay the minimum on a monthly basis to clear the debt quicker, this can help with your long term financial plans.
There are some forms of debt which you may not consider prioritising, such as paying off your mortgage early. While it is important to not break the terms of your agreement for any form of borrowed money, understanding where your priorities lie based on how much additional interest may be added on in the short term, can help you to know what to pay off first.
If your debt problems have become serious, and you are starting to miss or you’re not able to pay ‘priority debts’ such as rent, mortgage, court fines, energy bills, child support etc. then you may consider getting advice from a debt advice charity.
Know When Your Contracts Are Due To End
Having a clear understanding of when your contracts are due to end, such as your car insurance or your phone contract, will help you to regularly review your budget and also allow you to check for a better deal in advance. More often than not, shopping around can help you to either switch to another provider who is offering a cheaper price (or more benefits for the same price) or even as a negotiating opportunity with your current provider in order to barter them down.
Cut Back On Your Spending
Cutting back on your spending is a sure-fire way to take better control of your budget and your money management. Making small lifestyle changes can really make a big difference to your bank account. For example:
If you buy lunch for work every day at £5 per day, and you work 5 days a week, you are spending £100 a month on lunch. This equates to £1200 per year, just on lunches!
Now let’s add a morning coffee to that – in London, the average price of a coffee in independent coffee shops is £3.55. That’s an extra £71 a month and £852 a year.
So, you’re spending over £2000 on just lunch and a morning coffee every year.
The same can go for your day-to-day needs:
- Check price comparison sites for better deals on your energy bills.
- Switch to a cheaper supermarket to save costs on your food each week.
- Cut back some subscriptions – do you really need all of those video streaming services?
Take Advantage Of The Best Deals and Vouchers
Making tweaks to your lifestyle to help better manage your budget doesn’t have to come at the expense of all of your fun. There are plenty of deals on entertainment, food and drink out there in the form of voucher codes and coupons, particularly in the road to recovery for the entertainment industry after COVID.
Social media is a great way to get the latest, up to date deals, and having the likes of the TasteCard in the UK and other European equivalents at some of the top restaurants can help you to benefit from discounts on food and drink. Entertainment such as cinemas also offer discount days and, in some cases, will offer deals on both the cinema and restaurants too!
Managing your money appropriately can help to ensure that you build up a savings fund for future use, while helping to keep your head above water day-to-day. With small, frugal lifestyle tweaks you could find yourself saving more than ever before, allowing you to benefit in the future.