If you’ve been living from income to income up until now, then you might find the idea of a budget pretty overwhelming. When most people think about budgeting, they imagine days spend labouring over spreadsheets, and collecting every receipt they get. However, the truth is that budgeting can be a lot simpler than it seems. Most of the time, all you need to do is set up a strategy that you feel comfortable with, and the rest will just fall into place.
To help you get started on the right track, we’ve put together some quick tips for budgeting first-timers.
1. Make the Most of Technology
Unless you like the idea of writing all your expenses down in a notebook, there are easier ways to track your spending. For instance, you can download apps that connect to your bank account and watch your money for you. That way, you can ensure that you’re always following the rules of your self-designed budget. There are even apps you can access that will let you know if there’s a cheaper version of the product you want to buy elsewhere or discount codes you can use to cut costs.
2. Always have a Goal
The simple aim to “have more control over your money” is a great reason to start budgeting, but it’s rarely enough to keep you motivated for very long. If you want to make sure that you stick to the budget you give yourself, then it’s important to have other short-term goals in mind. For instance, your first goal might be to have £1000 in your emergency fund in the next 6 months. Remember, when you achieve your goals, reward yourself! A small treat is a great way to inspire yourself, without destroying your hard work.
3. Leave Room for Fun
When you’re budgeting, your first aim should be to make sure that you have enough cash for all of your essential expenses. Your second target should be to place money aside in a savings account, so you have money that will help you to reach your goals and overcome unpredictable issues in life. However, it’s also a good idea to make sure that you have some money aside that you can use for fun too. If you cut all of the thing you enjoy out of your life to save money, you’re going to get sick of your budget very quickly.
4. Reduce your Debts
One of the best ways to give yourself more money to play with each month is to get rid of your debts as quickly as possible. The fewer debts you have, the less interest you’ll have to pay. To simplify paying off your loans, make sure that you always compare your options before you borrow any capital. This will ensure that you’re getting the lowest possible interest rate for your situation. Once you’re paying back your loan, look for ways to speed up the repayments whenever possible.
5. Be Flexible with your Budget
For the most part, you’ll need to stick to the rules that you give yourself in your budget as stringently as possible. However, there are times when you might need to make changes to your financial plan. If something changes in your life that leaves you with more bills to pay, or less money, make sure that you adjust your budget accordingly. You can also leave some flexibility in your budget by having an “extra expense” category to put some extra cash towards. This will act as your “emergency fund” when something goes wrong.
6. Always Look for Savings
There are more opportunities to save cash in the world today than you might be aware of. Some people save hundreds of pounds every week because they’ve learned how to take advantage of vouchers, discount codes, and other savings opportunities. If you commit yourself to looking for new ways to save each month, then you’ll constantly find exciting ways to gain more control over your money. Challenge yourself to be more creative with your cash.
7. Stay Disciplined
Finally, whatever you do, make sure that you’re ready to commit to your goals. Once you’ve established your budget, make sure that you hold yourself to it, and track your expenses as you go. When you notice that you’re making progress towards your goals, remember to celebrate and reward yourself whenever you can. It won’t take long for your new budget to completely transform the relationship you have with money.