Looking after the family budget is often something we muddle through. We don’t have time, and it’s confusing. We mean to save, but things seem to cost more. Then we get into debt. Budgeting doesn’t have to be complicated or time consuming though, if you have a system you can use easily.
How to budget
Knowing where your money is going is the key to tightening the purse strings. We all spend more than we think.
So write a list of the regular things you always spend money on. Include bills, fuel, food, clothes, kids’ activities – the lot. Divide by 12 anything you pay for yearly (like car insurance), to know how much they cost you each month.
Keep a record each month of what you spend. A budget planner is a simple and easy way to record your monthly costs.
Keep this filled in every week. You’ll be amazed how much some things add up to – especially little regular treats like cups of coffee.
Track your transactions
- Keep the receipts for everything you pay for by card. Check them against your bank statements every month.
- Keep the receipts for any item you buy, in case you return them or they’re faulty.
- Pay bills monthly by standing order, to spread the cost.
- Pay store and credit card bills in full a couple of days before the due date every month. This will avoid charges and interest. Use online banking once you get the bill so the money pays in a couple of days before it’s due. Or set up an automatic transfer to pay it from your current account a few days after pay day.
So now you’ve started to keep track of your incomings and outgoings, it’s time to start building us some savings. Follow these five simple steps to help you get it right:
1. Look at your budget
After each month, look at your budget sheet and decide where to cut back. For example:
- Have a coffee at work instead of buying one
- Make packed lunch for yourself as well as the kids
- Walk to the newsagents or Scouts to reduce petrol costs
- Hold back on anything you don’t need, like clothes or make up (but do give yourself the occasional treat!)
2. Pay off debts
Always pay off debts before you start saving. The interest on debts is always higher than the interest on savings. Take a look at our guide on how to get out of debt.
Choose an amount you’re able to save every month. It might only be £20 at first. Save it with an automatic transfer into a savings account, straight after each pay day. Here are some ideas on how to start a savings plan, and how to protect your savings.
4. Get a credit card
If your savings don’t cover an unexpected cost, like car repairs, apply for a credit card that has an interest-free period to pay for it. Then pay it off in portions each month, so it’s cleared before the card starts charging you. Find out more about how to squash your monthly interest bill!
5. Think ahead
If you’re planning something expensive like a holiday, decide how much you can afford to put aside each month towards it. Then add up this amount for each month, to see how much it’ll be by the time you’ll be booking the holiday. Save this each month, and make sure your holiday cost is within this amount. Remember: you’ll need spending money once you’re there, too!
So work out where your money’s going. Stick to your method and keep everything up to date.
Here’s to spending wisely and saving for what you want your money to go on. Good luck!