We all know how it feels when January comes and payday seems eons away! Black Friday, Christmas, New Year parties, Boxing Day sales all seem like a conspiracy to empty our purses. Now is the time to keep your expenses in check and start to heal your #finances.
1. Monitor your spending
The easiest way to keep an eye on your spending is to use expenditure sheets. You don’t need to have Excel installed on your computer. You just need a word processor or a notebook and a pen. You will have to include everything, every single bill (rent, phone, water, electricity…). If you live in a houseshare, it’s quite likely most of the bills are included in your rent. Council tax, TV license, groceries, car repairs, cinema tickets are among the things that you must remember to include. Don’t forget the lattes you buy while at the office! Everytime you open your wallet, you need to record it!
Even better, keep a planned expenses sheet. You need to know how much you will be able to spend this month. What’s your planned income? If your pay is the same every month, then lucky you, it will be very easy to calculate your budget. If you are self-employed, it will be trickier. Now that you know your planned income, you must decide how much you can afford to spend each month. It’s easy! Council tax, TV license, phone, rent are all things which cost roughly the same each month. Organise your expenditures in categories: rent, phone, food, pets, clothes, savings, magazines, health, insurance, car, beauty, takeaways, cigarettes, etc. How much can you afford to spend for your food each month? For your clothes? Once you know this, you can decide how much to spend per week and per day. If you monitor your expenses closely you will soon figure where you can make changes. If you find that your total expenses equal your net pay and that you haven’t been able to save a penny, it’s time for you to make some radical changes!
2. You said sales?
Is it really worth buying something that is nearly out of season??? Fashion changes all the time. Why use your money on something that will be passé by the time you even grow tired of wearing it?
I am not saying don’t buy things that are on #sale. But watch what you are buying. Homeware stuff is all good. You can go for a TV, a new sofa, tea towels… as long as you really need them. Luxury goods are fine too. It’s great to be able to grab a nice handbag at a discount. After all, you will be using it for years. Same with jewelry. In regards with high street clothing I would rather buy something from the new collection than an item on sale. Or I would buy something that has a classic edge to it.
3. Have a Savings Account
Most people must have them already but let me emphasize the importance of having a #Savings account. First of all, it is better than to have lots of money lying around or on your current account. It encourages you to take responsibility for your future. Some people say you should keep at least 3 months expenses on the side. If you kept all this money on your current account, you wouldn’t be able to resist the temptation. You would spend it. However, if you keep it away from the rest, you know it’s for keeps.
I have 3 savings accounts, including an ISA. I also keep lump sums on different basic accounts (so I don’t have to pay fees). I find it extremely practical to use an app on my phone to move money around, from one account to another. I try to avoid taking from my savings but sometimes things happen and you need access to funds really quickly. It’s better to use some of your savings than to use a credit card. I’ll get back to that later.
4. Invest in index tracker funds
As I said I have a few savings accounts but the interest rates I am getting now are ridiculously low – far below 1%. I am only keeping my accounts for quick access to money in case of an emergency. If I want to plan for the future, like a pension for instance, I need something a bit riskier. This is why I have taken advice from some people and looked into index tracker funds. I am pleased to say that my gains have been a lot better than if I had kept my money in a regular savings account. What’s better? Get 0.05 % or 18% for your #investment?
5. Avoid getting a credit card!
For those of you who don’t have one yet, you are doing well. Just don’t go get one. Keep going like you’ve always done. Seriously. Avoid credit cards, unless you know what you are doing. Ideally you should be able to use it and pay everything back the next month. Who on Earth manages that? Not many people, trust me. Interest quickly adds up. This is particularly true for credit cards such as Aqua. They are made for people “with poor credit” but in reality the only thing they do is impoverish you even more. Their interest rates are so high you end up repaying too much for your own good.
There are ways to improve your credit: rather than getting a credit card get a small loan with your bank. It will hurt a lot less. Another thing you can do is register on the electoral roll. It will do wonders for your credit score. Also ensure you never miss a payment – phone bills, utilities etc… If you never fail to make your monthly payments you will be seen as trustworthy. This is important if you intend to buy a house!
6- Get rid of your credit cards ASAP!
If you already have some plastic, you know the feeling. It’s great to be able to spend, thinking you will pay back later… You are right, you will pay back… With interest! If you only make the minimum payment each month, interest will quickly add up and what seemed to be a manageable debt will soon increase and you will wonder why it’s taking so long to get rid of it.
If you already owe more than you would like and haven’t been able to pay more than the minimum each month, it’s even more important that you stop using your card immediately. Put it away or cut in pieces if you have to. Next, devise a plan on how to pay back as soon as possible. It is not rocket science: all you have to do is check how much you owe and how much you can afford to pay back each month. It must be an amount you feel confident with. You can set up a direct debit if you like. You are now on the way to financial health!
7. Save for that designer bag!
The sad thing is that us girls are encouraged to spend. All over the media women are depicted as looking for clothes, accessories… We are literally pressurized into squandering our savings!
We are also encouraged to crave for things we can’t afford. We watch the Kardashians, wanting to be like them… We see models who carry huge (and expensive) bags on Instagram. So rather than getting your plastic out for a handbag just like Kylie’s, why don’t you just save for it? Put some money in a piggy bank or better still, open a savings account for your dreamed item. Calculate how much you will need to save and for how long and put some money in regularly.
You don’t have to save for a designer bag, it can be for a holiday!
Speaking of piggy banks I saw this cute little thing today:
It would definitely make saving seem less of a chore!
– Take responsibility for your money! Your ability to save or to spend is your business.
– Use apps. They are very practical to check your accounts on a daily basis.
– Have a savings account separate from your current account. It is not enough to have some money left at the end of the month and get a top up with each pay. With a savings account, you can really watch your money grow.
– Money doesn’t fall from trees…. But like a tree, it will grow if you nurture it.
– Educate yourself:
- Talk to people – meet a financial adviser at your bank for instance. Attend wealth creation meetings.
- Read books about debt, money, savings..
If you are unsure about buying some clothes, don’t buy them!
Let me explain. We all know this moment when we try on some dress or whatever and feel like we want to add it to our wardrobe… Yet at the same time something at the back of our mind keeps nagging at us.. “I need this money to buy some food/pay my bill…” We usually get this feeling towards the end of the month, when payday is still over 10 days away. In this case it’s simple. If you need the money for something as important as feeding yourself or avoiding trouble, then obviously you don’t need the new clothes. I know it’s hard, but the best thing to do is to put them back on the rack.
One thing I also do when I am slightly undecided is postpone buying something. This is very easy to do. It’s all about choices. Instead of buying a new dress now, you tell yourself that it can wait till tomorrow or later. Usually I move on and that’s it. I have forgotten the dress. This means I didn’t really want it. If I still think about it after a couple days or more, then it is definitely an item I need to buy!
Do you find it hard to refrain from anything you don’t necessarily need right now? Do you have tips to share? You can either contact me or post a comment in reply to this post.