If the cost of living is becoming a challenge for you, it’s important to work out a budget. This can help you stay in control of your finances. Try these tips:
- Make a complete list of your outgoings
Look over your bank statements and make a complete list of all your bills so you know where you’re spending money. Don’t forget some bills are seasonal, so factor in birthdays, holidays and other special occasions such as Christmas.
- Sign up for a budget planner
Use an online budget planner to match your income against your expenditure. This will allow you to see, at a glance, how much cash you have left over each month. If you’re spending more than you have coming in, this is something that should be addressed immediately.
- Consider areas you can cut back
Look for areas where you might be spending too much. Can you cut back on media subscriptions? Do you need the tier of mobile phone contract you’re on? Cancel any services you’re not using, and downgrade ones you aren’t making full use out of. If you’re still overspending, consider whether there are luxuries you can cut back on in the short term.
- Put any surplus money to work
If you have any money left over at the end of the month, look for ways to put it to work. If you’re in debt, make an effort to clear it as quickly as possible. If you’re not in debt, put some money in an instant access savings account so it’s earning interest but can still serve as an emergency fund.
- Take Control Of Your Finances
Once you’re on top of your debts, try to build a liquid emergency fund of between three and six months of expenses. Consider Corgi Home Plan insurance to avoid any expensive boiler issues. If you have any plans for major expenditure in the next few years, start putting some money aside for that too. These funds should be in a low risk, liquid savings pot.
- Don’t Neglect Long-Term Planning
In addition to your short-term emergency fund, think about your retirement savings. If you’re in a position to contribute more to your retirement now, that will stand you in good stead in the future. Long-term savings can go into investment vehicles depending on your risk tolerance.
- Stick to Your Budget
Making a financial plan is easy, but sticking to it can be a challenge. Some people find tactics like putting their funds into ‘pots’ so they’ve allocated money for each bill helps them a lot, such as energy costs, entertainment, social. Setting up automatic payments so priority bills are covered first can be helpful too.
If you’re the sort of person who spends money on impulse, don’t put yourself in situations where this can happen. It may take some time to build good new financial habits, but it’s worth doing, and it will help you cope with the current cost of living crisis, and stand you in good stead during better times too.
