It’s that time of year when we’re all still feeling the pinch after Christmas – some of us are still recovering from spending too much on presents and celebrating over the festive season. The good news is that February is a great time to reassess your finances for the coming year and put into place all those good intentions you claimed were your New Year’s Resolutions. By looking at your finances at the start of the year, you can work out a budget which will allow you to have a happier 2014 when it comes to money; it all starts here!
Work out Your Essential Outgoings
When it comes to life’s essentials, we all have a slightly different view about what’s involved. For some women, mascara and eyeliner might be classed as essentials, whilst a subscription to Box Nation or tickets to every football game of the season could be essential to many guys. However, when we talk about essential outgoings, this means things you really need in order to survive. Things like rent or mortgage payments, so that you have a roof over your head, electricity and gas, council tax, car payments and other financial commitments are all classed as essentials! Food is essential too, but this is something we’ll look at later. The chances are you can’t reduce any of your essential payments, so you need to find the money to pay for them every month. Start planning your budget by listing all your essentials in one column and the amounts in another column. This total is the minimum amount of money you’ll need each month to cover your outgoings.
You might have everyday expenses, such as lunch at work or travel costs. These can usually be adjusted to suit your budget; for example if you’re trying to save money you could prepare a packed lunch at home rather than going out to buy a sandwich at work. Work out how much you’ll spend a week or month on everyday expenses and see if there is any way you can reduce this, by making more sensible choices and planning ahead.
Life’s Little Luxuries
We all need little luxuries; things like haircuts, a massage, session at the gym or some new makeup. It’s important to budget so that you have a little money left over for luxuries each month. If you don’t have any cash left after working out your essentials and everyday expenses, look at where you can cut back a bit. If you’re a homeowner, this could mean switching your mortgage to a better deal. Mortgage lenders such as cbonline are a great place to start your search for a better deal than your current mortgage offers you.
Kill Your Plastic
Did you know that spending less on plastic and using more cash is a great way to stay within budget? By taking out a certain amount of money each week or month in cash and spending this rather than relying on debit or credit cards, you’ll find it easier to keep track of what you’re spending. Spending cold, hard cash feels more real than simply putting it on plastic and you’ll be constantly aware of how much money you have left in your wallet. Once you’ve worked out your monthly budget, you should be able to set yourself a weekly allowance which you can withdraw to spend as you please. After all, isn’t there something rather satisfying about paying with actual real bank notes?
Another great budgeting tip is to cut up your credit cards. If you don’t have them, you can’t use them! And don’t be tempted to memorise the numbers so you can shop online – that’s counter-productive. If you’re shopping online, use your debit card and try to avoid impulse buys. If you do buy anything on impulse, at least you will be paying for it straightaway rather than racking up huge debts which you will need to pay back at a later date. If you have existing credit or store card debt, you can channel any money you have left each month after you’ve paid your essentials and everyday expenses into clearing this debt – always remember to pay off the card with the highest interest rate first.
Budgeting doesn’t have to be rocket science and you’ll be well on your way to a happier financial year in 2014 if you follow the above tips. By keeping track of what your outgoings are and working out where you can cut back and where you can afford to treat yourself a little, you’ll find your finances will be in a much healthier state by the end of the year!
About the Author
Alice Higgins has worked as a financial and property journalist for the last 5 years, writing widely for online and print publications. When it comes to budgeting, Alice has two children to support and when it comes to weekly food shopping and household bills, she sticks to a strict budget and believes it makes life easier for everyone!