How this little trick will save you thousands:
If you’re constantly living hand to mouth every month, thinking about how to manage your finances is completely off the table. Your bank letters have probably been mounting up, you really don’t want to check how much you’ve spent or whether your bank is writing to tell you that you’ve exceeded your overdraft limit.
As a young professional myself, I have my own financial goals that I want to achieve; buy a house and clear my student and law school fees. Whether you’re well into your career or just landed your first job, its important to start thinking for the long term and managing your money properly. By implementing good money management tips now, you can take control of your spending habits and be in great stead to save yourself thousands.
Although I am no financial expert, I’ve compiled a list of budgeting tips which have worked for me and will have you well on your way to saving in the £1,000’s
1. Set a goal
Its important that you have something to work towards. It doesn’t have to be save £5000 by the end of the year it could be only spend up £250 per month on leisurely items or cut back on food spending by £100 each month. Knowing what you are working towards keeps your eye on the ball and makes it easy to keep a track of whether you are going to achieve your goal or not.
Personally I like to break my goals down so that I feel they are more manageable. Rather than saying I want to save £6000 for the year (which seems a life time away) I will say I want to save £500 per month. Make sure you write it down where you can see it. I have a business planner from Daily Greatness to write it as a hard copy and also in Notes on my iPhone so that I can read my goals at any time.
2. Write an income and expenditure
This is really important too. How can you possibly know what you have available to save or spend if you don’t know what your income and expenditure is! This is where you get real with your finances and put pen to paper. I know my income and expenditure off the back of my hand! Write out what money you have coming in down.to.the.penny. and likewise for your expenses.
By expenses I mean those which are non negotiable. Credit card debts, phone bill, travel costs, rent, utilities etc. Now you can see what your money is being WASTED on. The gym membership you use once a month, the magazine subscriptions and all that take away . The reason why I didn’t include food as a non negotiable expense is because its more than likely you are spending way more on food than is necessary. After checking the non negotiable expenses, I would definitely recommend that you set a food budget.
Once you have checked your income and expenditure, you need see how the goal you set, fits in with it and what you will have left over after your goal. Your set goal is also non negotiable, but you need to make sure that you actually have money to live off too! Make sure you aim high but make it achievable.
3. Keep all receipts
I hold my hand up with this one, I have been guilty of telling the cashier that no, I do not need a receipt. HUGE mistake! There are two key reasons why you need to keep your receipts:
a) To keep track of what you are spending. Saying that you have online banking and can keep a check on what you spend that way just isn’t going to cut it. Remember that cash withdrawal you made for £40? Bet you can’t remember what you spent that on. You need to keep a good money trail not just so that you can add up how you spent your hard earned cash but also what you are spending your money on.
b) To get paid! There are many apps out there which pay you for snapping your receipts. There are cash back incentives which allow you to cash in what you have earned. I recently signed up to receipthog. Its definitely worth giving it a try and seeing whether you can make a couple of extra £’s each week.
4. Cut back on what you spend the most
Look at what you spend the most and find ways to cut back. Mine was food! Start cooking more at home (more on that here) and making larger portions for dinner so you would have enough for the next day. Plus enough fruit and snacks from home so you aren’t tempted to buy stuff during the day. Yours could be clothes, magazines, bags, whatever it is . Cut back. It’s not necessary and its really affecting the amount of money you can really save.
5. Plan out your week
If you have socials and events to go to, where are you guys going and is this going to blow your budget? If so you may need to rethink where you go. Having a budget is TOUGH but if you want to stay within your limit I’m sorry but you need to make some sacrifices. It may mean cancelling plans or going somewhere less fancy. Can you go to a coffee shop instead or go without the starter?
6. Review your expenditure every week
Yes, you are going need to do weekly check ins! Set an alarm in your phone or a reminder so you don’t forget. Don’t feel uncomfortable with checking your finances even if you know you have gone over. It’s important to have that reality check with yourself to get back on track. It is better to check your budget at the end of the week, rather than the end of the month, which can make a difference between overspending by £30 than £230.
Remember the aim is not to spend every penny which you have set for your budget. Don’t think ‘I have X amount to spend’ instead think ‘I have X amount, do I really need to buy this’.
I hope these tips are useful and have you on your way to achieving your finance goals! Let me know what budgeting or financial tips below!