Check your spending habits
Although with online banking, access to your current account balance is a few mouse clicks away, it’s still easy to lose track of how much money you spend throughout the month – especially if you use plastic to pay for everything.
It’s surprisingly easy to spend £100 on your debit card and not even notice it, but when you are paying for things with cash you tend to curb your spending a little as you can see the money in your pocket dwindling.
A good way to check your spending habits is to withdraw a certain amount of money to see you through the week and stick to it. If it doesn’t last as long as you’d hoped then you should have a pretty good idea of where you need to cut back.
Another useful tip is to keep a record of all your purchases – getting receipts every time you spend is probably the easiest way of doing this.
This may seem like a chore at first but once you get into the habit then it is a great way to find out exactly where your money is going.
Budget for the month ahead
The Halifax research found that more than one in five people check their bank balance every day, while a further 22% check it more than three times a week. But if you set yourself a monthly budget, and make sure you stick to it, then you shouldn’t have the same compulsion to constantly check how much money you have (or haven’t) got.
Creating a budget is a fairly straightforward process and to start you need to work out your monthly disposable income.
This is done by working out your total monthly income and expenditure, including all household bills, mortgage or rent payments and other everyday spending, such as petrol and groceries. You then subtract your total expenditure from your income and hopefully you are left with a positive figure which is your disposable income.
If you are left with a negative figure then you need to make some cut backs straight away, maybe taking out some of the non-essentials such as expensive television contracts or gym memberships, there are plenty of ways to keep fit without paying costly gym fees.
Once you have sorted out your income and expenditure then you can budget to make sure that your priority bills, such as mortgage and Council Tax payments, are paid first and then distribute what is left among your other monthly expenses.
Now cut your costs
If you are finding that you are running out of money at the end of each month then it is worth looking at ways in which you can further cut your costs and perhaps even give your finances a comprehensive review.
This doesn’t just necessarily mean giving up on your social life altogether – though this is the area that may be the first you cut back on if you can’t make ends meet – as even making small adjustments to your daily routine, such as skipping the newspaper and coffee on the way to work, can save you hundreds over the course of the year.
You should also review expenses such as your car insurance, home insurance and energy provider as just changing these using MoneySupermarket’s online comparison tools can save you around £700 per year.
If you are struggling with debt
However, if you are struggling with debt then even taking these steps may not be enough to relieve your monthly money worries.
If this is the case you need to talk to your lenders and explain the situation as soon as possible. Ignoring your debt will not make it go away – it will just make your current situation worse.
It may also be worth seeking professional advice from free, independent charities such as the National Debtline which can be contacted via its website or on 0808 808 4000. The Freephone line is open between 9am and 9pm Monday to Friday and 9.30am and 1pm on Saturdays.
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