With so may different things to pay for, managing your money until payday can be difficult.
Often, we end up going into debt without meaning to, or because we have no other options. There are many ways that your money can be eaten up throughout the month. Finding ways to make your money last can be the difference between you going overdrawn or needing to take out a loan to get through to the end of the month, and making it until payday with a little money left over.
Preparing for bills and expenses in advance and budgeting your money can give you peace of mind and mean that you aren’t hit with unexpected payments or overdraft and interest charges. Check out these tips below.
1. Create a budget
The first thing you’ll need to do to get your finances in check is to create a budget. Although this may sound daunting, it’s not that difficult and means that you’ll always know how much you have to spend and how many payments you have to account for. You don’t need to make a spreadsheet if you don’t know how to, a budget can be created on paper, just make sure that you look at your bank statements and write down the regular payments that come out of your account each month.
Look at bank statements over 3 or 6 months to get the best understanding of your outgoings, as some payments may not be taken monthly. It can also be a good idea to consider events or occasions that may require spending like birthdays, so that you can work these into your budget.
Once you know how you’re spending each month on household bills, food, vehicle running costs and anything else that you consider a regular expense, calculate the total of these and compare them against your income each month, if your income changes regularly. If you get paid the same every month, then budgeting your money will be a lot easier.
Work out how much you have leftover after you have paid your essentials and then you can budget this into certain categories such as “eating out, leisure, days out, clothing” and anything else you would consider more of a luxury than a household essential.
You can download a budget planner template here.
2. Be prepared to make cuts
Once you have created a monthly budget, you may be left feeling rather deflated. If your outgoings are much more than your income, then you’ll have to be prepared to make cuts. It can seem impossible to make cuts to your budget but most people can usually shave a fair chunk off of their outgoings with a little bit of effort.
First, you’ll need to look at your spendings and see whether any regular payments that leave your account are more of a luxury than a necessity. Most of us are guilty of signing up for something that we don’t need and then forgetting to cancel a subscription. If you are paying for a subscription that you no longer use or you’re willing to get rid of, then this can free up some cash in your budget.
Once you’ve identified luxuries that you spend on regularly and have removed these from your outgoing budget, you can focus on reducing the amount that you’re spending on necessities. Although you may not be in the position to move house and reduce your rent or mortgage payments, you may be able to reduce the amount you’re paying for your utilities.
Shop around and maybe even visit a comparison website and see if you can save any money on your phone/internet, TV package, gas & electric, or water bill.
3. Start using cash where possible
As we live in a world where paying with plastic is becoming commonplace, it can be difficult to know how much we’re spending until we look back at our statement. Cash can be a great budgeting tool that allows you to keep track of your spending more easily. Although you won’t be able to pay your direct debits in cash of course, you can for other things in your budget like food, fuel and days out. It’s usually best to withdraw a set amount of cash each month and divide it up in envelopes or pots for different things.
This will mean you know exactly how much you’ve spent on food and how much you have left to spend on food for the month. This can take a lot of complicated calculations out of the mix and make it simpler to keep track of what you’ve got, you may also be more likely to have some money left over at the end of the month by using this method.
4. Sell anything you don’t use
If you’re looking for some extra cash, it can be a good idea to have a clear out of your belongings. Most of us have got things that we no longer need cluttering our homes that can be sold. Consider selling these online or at a car boot sale to boost your income for the month.