Have you noticed that the more money you have, the more you seem to spend? Saving your ‘spare cash’ can seem like eating soup with a fork, as every penny just disappears!
That can make it very hard to put money aside for big purchases, or big problems.
Worse still, you could find yourself on a slippery slope to being in debt. That’s often the result of ‘robbing Peter to pay Paul’, which is an expression that means moving cash around to paper over ever-bigger cracks and shortfalls.
It can quickly get out of hand and you find yourself wondering: ‘How did my finances get in such a terrible mess? Or, where did all my money go?’
Juggling your money becomes much easier if you take time to work out a household budget and then create a plan to make your money last. If that sounds a bit boring, then it doesn’t have to be! Budgeting properly can be the key to making ends meet, but you might also start to find ways to pay off any loans, and maybe even start saving for major purchases like a holiday. Just being in better control of your cash with a budget can actually make you feel better, and more confident when the bills come in.
So, what’s meant by budgeting? Let’s look in more detail why a budget is important to your financial health.
It’s far too easy to spend money. Every hour, of every day, there’s another temptation to open our wallet or purse, flash our cards or present our mobile phone payment systems.
It’s also extremely common for people to do all this without giving much thought to where the cash is coming from to cover all this buying!
Let’s be honest, looking at your bank balance or the cash you have in hand can be a little bit depressing! It can even cause moments of deep anxiety and dread. Whereas ‘retail therapy’ and buying bits and pieces we want is far more fun and satisfying.
From this picture, it’s all too clear how the problems happen. With so many easy ways to pay for things - and so many great products and marketing messages around us – we can quickly spend more than we actually have.
Contactless payments in shops have probably added to this. Not least as the amounts going out sometimes show up on bank statements after a delay, fooling us into thinking we have enough cash in there! This is not just about giving in to temptation though. Even if you are a very careful spender, who sticks to only paying for the basic things you need each week, ‘stuff happens’. You think you’ve got enough money to get by, only to face unexpected bills or expenses. Perhaps a household appliance or your car needs urgent repairs or to be replaced.
Making a budget is a way of looking at where your money is going – rather than using all your time worrying where it all went! Budgeting at its most basic is simply about looking carefully at the money coming into your household, and then noting down the things you need to spend it on.
So, for example, you add up all your wages and benefits, to work out how much you have available to spend each month. Are you likely to get any bonuses, cash gifts or other sums of money that you can add to your ‘pot of available cash’ every now and then?
After that, you make a note of your outgoings. The things you need cash for each month like mortgage payments or rent, council tax, utility bills, phone contracts and of course food.
Your budgeting also needs to look closely at household expenses that are occasional, rather than weekly or monthly. This could include things like television licence fees, car tax and MOTs and cash to spend on Christmas and birthday gifts for children.
Measuring what cash you will have, against the money you need to spend, gives you a clearer idea of two things:
• Months when you might have more money than you need (cash that you can then save).
• Months when you won’t have enough money for what you need (when you can use any savings to plug the gap).
Sadly, there are possibly going to be times when you can see a serious shortfall in the money you will have available. That may mean considering carefully researched temporary non-interest loans. More on this later!
Having a budget doesn’t just make things clearer, it makes it far easier to make positive changes. It’s a great way of finding ways of cutting down, and spending less. If you can see times when you simply won’t have enough cash, then it’s a sign that you really have no choice in finding ways to cut down.
Having a clear budget is like a road map, and one of the things it can show you is any ‘bad habits’ or avoidable expenses you may have. For example, are you still paying out regular amounts for a service you don’t use any more, or are you paying twice for things without realising it?
By making a clear budget you can see how much cash you spend on things like takeaways, nights our and posh coffees too. Seeing that down on paper can be a wake-up call to cut back and find less expensive treats, to free up money for urgent or important things.
This doesn’t mean budgeting is all about giving up everything you enjoy, or making yourself (and the rest of the family) miserable. With proper budgeting, you can look for lots of small savings and clever ways to ‘cut corners’, that all add up to being able to make your money stretch further. This could include, for example, learning to cook your takeaway favourites ‘from scratch’ and for less money.
Other ideas to help you cut down on your outgoings include shopping at the times when supermarkets discount their products, using a cheaper supermarket or cutting out treats and extras for a week or more. You could walk instead of paying out for petrol or buses, and find no-cost ways to entertain the family, to free up more cash for the essentials.
Second hand and charity shops are a great way to make your clothes budget go further, or you could try selling your own unwanted items online to create extra spending money.
Remember, budgeting is not just to make your financial situation healthier, it's also so you can save up for something special.
All of this is designed to put you in control. Having a firmer grip on your money brings better peace of mind and stops you from getting in a tangled mess.
One of the worst feelings in the world is realising that you simply don’t have the cash for an important bill, or to do a food shop. Not only is this a horrible situation, it could lead to something even worse – making the wrong move and ending up in serious debt. Incidentally, will budgeting help if you are already in debt? The answer is definitely, yes!
In fact, that’s when it’s most important, as it can help you to manage repayments, and make sure the debt doesn’t get bigger. In this situation, planning your money in, and money out, has to take into account steps to make sure that you have your loan repayments ready, on the day the cash is needed.
Should you start budgeting and planning even if you’re not in debt, or even close to needing a loan? The answer is still yes!
Being careful to plan out your cash coming in and the cash going out of your household helps you to stay firmly in control. Getting the right balance can mean spare money to set aside for a holiday, a new car or to redecorate a room for example. Without a budget, that sort of saving can be trickier.
It is wise to put any extra cash in a savings account, to help you in an emergency – some people call it their ‘funds for a rainy day’.
Mobile technology is wonderful for providing you with lots of opportunities to spend your hard-earned cash – online shopping is way too easy these days! Did you also know that your mobile phone could help you with your budgeting? There are several apps that support better money management and planning, including the ones which we feel are the three best budgeting apps:
This is a free app that you can download for iPhones and Android phones. You simply key in your financial information and ‘Emma’ shows you ways of cutting back. The app also works out targets for you, including ways to save. Then, when you slip up and spend freely outside your planned budget, Emma sends you a stern notification to get back on track! If nothing else, her advanced algorithms help you to find ways to control your money.
Having all your bank accounts, credit cards and other financial information all in one place on your phone can make controlling your money much easier. Yolt is clear and simple to use, and offers you a really helpful cross-section of your financial dealings. By using this free to download and use app (for iPhones and android), you can get helpful insights into where you are up to with your money.
For many people, this is the best of the best when it comes to apps to help you to budget better. It offers you a clear ‘dashboard’ – a layout to help you input your figures – and then calculates lots of handy ways to prioritise your spending. There are charts and graphs that show your progress and make it clear where your savings can come from. Money Dashboard doesn’t actually interact with online banking or anything like that. It’s just a great tool to keep track of your money day to day. This app is also free to download for iPhone or Android devices.
Even with careful budgeting and planning ahead, there are times when everyone finds that the money they have available is simply not enough. What happens if you need to get your hands on some extra money, to help you to keep your current budget and meet your outgoings?
The most important thing to do is research your options carefully, and only consider loans from providers with a good reputation, who help you to manage the amount you lend and your repayment terms.
One of the leaders in this is Creditspring. This is the first membership loan with financial stability at its core.
By becoming a member of Creditspring you can have up to two no-interest loans over a 12 month period. There is no interest to pay on this lending. Which means you only pay back the amount you borrowed (and your membership fee). (Rep. 43.1% APR fixed)
There are different levels of membership (Plus and Core) depending on how much you are likely to need over the year.
Other benefits of membership include a personalised monthly financial stability score, to help you keep track of your budget, and lots more tips on improving your money management and financial health. The Creditspring membership is a great way to find better financial stability and money control.
It’s clear that taking the time to map out your money – and create an accurate budget – can be valuable. Especially as it puts in you control, and makes your financial situation much clearer. From this, your money management becomes more confident. One last budgeting tip: keep at it, as it really starts to be good for your financial wellbeing when it becomes something you always do.