Stagnant wages and rising living costs mean that your monthly pay packet might not stretch as far as you’d like it to. You have the mind and attitude of a billionaire philanthropist, but this is sadly not reflected in your bank balance. But if you’re struggling, do not worry – you're not alone. Here are some tips to help you get on top of your money so it doesn’t get on top of you.
Step 1: Get budgeting
Figure out how much is coming in and going out of your current account each month. That’s it, you’re budgeting. Easy! You can do it the old-fashioned way by gathering bank statements and putting income and outgoings on a spreadsheet or there are a number of apps that make this whole process simple.
Step 2: Streamline those bills
Food, essential. Glitter, non-essential. Rent, essential. Diamanté unicorn helmet, non-essential. You have some tough decisions to make and it all starts when you divvy up your expenses into essential and non-essential. Make sure you’re paying as little as possible on essential dosh-devourers. If you have a mortgage, consider switching to a fixed rate deal if a rise in interest rates would hike your monthly expenditure. Get friendly with price comparison websites and switch your bills when they come up for renewal. Also check that you're receiving what you're entitled to in terms of benefits. Are you entitled to state childcare? You may be surprised.
Step 3: Time to be honest
Looking at your non-essential expenditure might give you a nasty shock. Did you know you have an £800-a-year cheese sandwich habit? Or that by ditching your crisps and chocolate fixes you could afford an all-inclusive week in the Maldives? Those small luxuries mount up so be ruthless about where you can cut costs.
Step 4: Cut down manageable debt
There are always practical steps you can take to simplify the situation. Pay off your most expensive debts first. If you can switch to a zero percent balance transfer deal, you can pay off your credit card without accruing further interest (a transfer fee may apply). Always try to pay the balance off in full and never stick to the minimum payment, as this will prolong your debt.
Step 5: Get help
If your debt has spiralled out of control, get help today. Don’t compound the problem by worrying but taking no action. Rather than pay a debt management company, go to a charity like Step Change. A debt management plan could be the right thing if you can meet your absolute essential bills, like your mortgage or rent, but are struggling with credit cards or loans. Or, if things are feeling tougher than that, talk to the Citizen’s Advice Bureau for practical help.
Step 6: Have fun
Make your budget a family project by creating a spending wall-chart. Get creative and use stickers, coloured pens or even cheap glitter (I’ll even allow this to be placed on the essentials list for once). Run a competition whereby whoever can reduce their spending the most or come up with the best moneysaving tips gets an affordable treat such as being cooked a favourite meal.
Don’t forget to give yourselves a massive pat on the back every time you bring down your expenditure. You deserve it!
Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.