Counsellor Jamie McQuade looks at how to manage your money better
I know that this can seem like a daunting task at times as so many people don’t manage their money properly and the prospect of understanding and improving the situation can feel like an uphill struggle.
However, it is something that if you can get on top of, it can really help reduce the level of stress and constant worry that can clutter up our minds and allow you to see that there is light at the end of the tunnel.
Having spent over 20 years in my previous career working for a bank I want to share with you some tried and tested strategies to help get on top of your finances in the right way.
Allow Some Time - Like anything in life, it takes time to understand and improve how you manage your money, so the key here is to be patient and put the right steps in place.
Budget Planner - Creating a budget planner is the first step and if you have one already in place that is fantastic you can use this guide as a way to review it. If you don’t have in place, it allows you to see visually what your financial picture looks like. There are so many options available now that makes this more straightforward from old school pen and paper to online tools you can get through your bank/building society website and also apps you can download. The aim of a budget is to see if you have enough money coming in to meet what is going out and if you don’t it can help you start to get to grips of your finances.
Look at your income - Most of us have a good grasp on what our monthly income so this part of the budget planner is usually the part that takes the least amount of time. If you genuinely don’t know the figure, then grab your payslips and bank statements and find out.
Know your outgoings - All of us will have regular outgoings that are fixed and also those that can vary month to month. The fixed ones such as mortgage, loans and rates - in my experience - people will have a better knowledge of than the outgoings that are variable. By variable, I mean our expenses that we spend each month and when we check our balance, we have no idea at times where the money has gone. A simple way to get a better handle on our outgoings and expenses is to get the last couple of monthly bank statements and go through them to add up our outgoings. What you will also find is that there will be gaps when we spent cash or used our card on stuff and little luxuries that we can’t even remember.
Direct Debits and Standing Orders - Get a list of your direct debits and standing orders, go through them carefully. So often I would have seen customers that would have direct debits/standing orders coming out every month and they had no clue what they were even for - but as they were for small amounts, they never queried them.
Any outgoings that are not essential cancel them and you’ve already begun to trim your outgoings.
Are You Paying the Best Prices? - We are all guilty of just letting our bills roll over and renew for the electric, insurance, internet etc but are you getting the best deal you can?
Shop around and see what offers are out there and make sure you are paying the lowest prices that you can.
Trim Unnecessary Expenses - Part of managing your finances better is taking into account every penny which involves looking at all those little outgoings we spend our money on- the gym membership we never use, subscriptions for magazines etc we never read, the morning coffee or lunch we buy most days of the week. I’m not saying you should give up every little luxury you have but if you spend £5 a day on your lunch in work five times a week, that works out as £25 a week, £100 per month, or £1200 per year.
When you put it in those terms, it shows how much that £5 here and there every day can really add up.
All I’m suggesting is, if you could just consider areas where you could tweak a little here and there by setting yourself a limit of how much you can afford to spend, you could really make some savings.
Stick to the Budget - Once you have figured out what your budget looks like, it takes effort and consistency to get used to keeping within it.
The budget will need updated regularly to make sure that it works for you and can be done in a short space of time as you have already done most of the leg work creating the budget.
Bills Account - Setting up a number two account or bills account can help you to potentially manage your finances better. After you have worked out your monthly outgoings via direct debit and standing order, setting up a second account can allow you to leave the amount you need plus a little extra to cover, say your mobile phone bill being higher one month, in that account.
Then you can transfer over the remainder of your income to a second account which you can use as your account to spend freely without the worry of having to make sure you have not overspent and not left enough to cover your bills.
Don’t Bury Your Head in the Sand - If your finances are out of control, it’s good to know there is help out there.
Speak to your family or friends, call into the bank/building society for help or book an appointment with your local Citizens Advice Bureau and talk it through with them.
I’m a big believer that there are not too many problems in life that can’t be solved by talking about it and asking for help.
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