The Best Advice on Money and Budgeting

Rafael is a college student. She’s living on her own, for the first time in her life. She’s budgeting and learning how to pay her own bills. She doesn’t have any specific accounting or financial skills.

She also doesn’t have a steady source of income. Her only job is performing at parties. Rafael has a great voice, and she’s on-call with a talent agency to sing at birthday parties, bar mitzvahs, and other events.

On the nights that she works, she earns good money; she’ll sometimes bring home as much as £300 or £600 in a single evening. But then she’ll go for a week or two without any more paying gigs.

How to Manage My Budget?

Money and Budgeting

During the low times, Rafael uses her saved money from the gigs. She has been forced to know how to budget herself, from a very young age. Over half of UK households keep a regular budget. Most say it gives them peace of mind about how much they are spending and makes them feel better about life in general.

A good budget will provide detailed insights into your existing financial situation. It will show where your money is going, what your expenses and commitments are and positively track your progress towards your goals.

How to do a budget

The first thing that you need to do to make a good budget is a make a list of all your income and expenses. It may be a good start to split your income with regular and irregular income. Regular income is income that you earn each month or week regularly.Irregular income is income generated from sources which are not always guaranteed

Now lets make a list of your fixed expenses like mobile phone bills, line rentals, mortgage or rent , utility bills and council tax

From here we will now subtract all regular fixed expenses from fixed income , this will now let us know how much we have left over each month or how much extra work needs to be done in order to break even

If you have a target saving, you can now also calculate how much extra you need to work in order to reach that target savings goal

It will take a little effort, but it’s a great way to get a quick snapshot of the money you have coming in and going out. Without a proper plan, your finances are left to chance. Only through budgeting can you develop a clear picture of your current situation and a projection of your future.

If you set a budget, you will be:

  • Control and monitor your debt intake, thus preventing you from running into debt.
  •  Less likely to get caught out by unexpected costs
  • Since you will be able to monitor your finances, your credit ratings will be good.
  • With good credit ratings, you will be legible for a house mortgage or a nice personal loan
  • Able to spot areas where you can make savings
  • In a great position to save up for a holiday, a new car, or another treat

Cost to consider while budgeting

Before you start your budget, you’ll need to work on the following types of bills:

  • House related to cost and bills
  • Living cost especially if you live in major cities
  • Financial subscribed products payments e.g. insurance products
  • Costs associated with your relatives, families or friends Family
  • Travel and movement costs inclusive of (car costs, public transport…)
  • Vacation costs or activities e.g. (holidays, or sports or restaurants)

There are multiple ways of managing one’s budget. Budget planners which can be found online are becoming increasingly frequent and efficient.

Most of them will require you to input a lot of data concerning your spending and income. Some may require some bank statements, your local council bill, and associated costs.

This information will be retained and tracked for your budget. Alternatively, you can set up a budget using a spreadsheet or just write it down on paper. There are also some great free budgeting apps available and your bank or building society might have an online budgeting tool that takes information directly from your transactions.

Why is a personal budget so beneficial?

  • Control your money and maximize your use of income
  • Keep track of your spending and help you live within your means
  • Allows you to plan for life changes and rainy days
  • You can learn how to avoid over-reliance on credit
  • Setting and achieving your short and long-term goals becomes easier when you have the tools to motivate you and keep you on track
  • It’s often not until people see their spending habits captured in a budget that they realize just where their hard-earned dollars are being spent.

If you can’t keep up with your budget?

When most people start making a budget for themselves, the time frame is weekly, monthly or pay-to-pay. This is a good start, but unfortunately, short-term budgets are easily derailed by unexpected or overlooked expenses. Your expenses will constantly change, so for a budget to work it must be long-range, comprehensive and flexible.

Keeping up with your budget won’t be as easy as many people would like it to takes a lot of self-discipline to maintain your budget schedule. You may need to cut out on some of your favorite’s habits such as getting lunch from fast food joints. You may also check on your spending, especially if you lose one of your streams of income.

 Some ways you could reduce some spendings could be:

Getting everyone onboard

For you to maximize your budget, you need to involve your family. You need to explain why you need to budget and the cost-benefit.

You may need to have a chat with everyone within your household, and maybe come up with incentives especially for the kids. Though you may exempt the small kids, out of this, try to familiarize the teenagers or anyone over the age of sixteen on how budgeting effectively could positively affect them. You can try to work out how much they should spend with the available money

Sit down together and make a plan that you can all stick.

Work out how much spending money is available and agree between yourselves what you’ll each have.

This could be as easy as making your lunch at home or canceling a gym membership you don’t use.

You could also keep a spending diary and keep a note of everything you buy in a month.

Or, if you do most of your spending with a bank card, look at last month’s bank statement and work out where your money is going

Reducing your monthly house bills and mortgage

By far, the biggest consumer of our incomes are the house bills and mortgages. According to the normal trajectory, the cost of household bills will continue to rise across the UK. Since the problem doesn’t seem to be going away anytime soon, residents will have to act smart and try to capitalize on areas where they can easily save on.

This may include:

  • Reducing your home phone and broadband bill
  • Get a cheaper mobile phone bill
  • Cutting the cost of your water bill
  • Cheaper gas and electricity
  • Are you paying too much Council Tax?
  • Slash the cost of driving and public transport
  • Pay your bills on time

Find out more about possible places, or some small bills that you may not think mean a lot, but in the long run, may end up being quite expensive

Review after every situation change

Sometimes our circumstances may change. An increase in income, a will left by a family member or your wife could possibly land a new job. All these may result in your change of situation.

You are required to review your budget once this happens, or just after a very few months. You might get a pay rise, which means you can save more, or you might find your household bills increase.

Pay off your debts on time

If you have loans or owe money on credit cards it usually makes sense to pay off the debt that charges the highest rate of interest first

Examples may include:

  • Credit cards debts
  • Store cards, which normally charge the highest rates of interest
  • Personal loans from the bank, which normally charge a lower rate of interest than credit or store cards
  • It is important to make sure you don’t break the terms of your agreements

Ask for help if you can no longer manage

Some people associate asking for help, as a sign of weakness, or only do so when things have turned for the worse. If you’re already falling behind on debts, it’s probably important that you may start inquiring about debt advisors on debt charities who don’t any fees at all for their services.

Of important should be your priority debts, in which falling behind on multiple payments, may result in extreme measures against you, such as court actions or bailiffs.

Priority debs include

  • Rent,
  • Mortgage,
  • Court fines,
  • Energy bills,
  • Council Tax,
  • Child support

Set yourself a savings target

According to the British journal, More than a million people in the UK have less than £100 in savings; this is way below the recommended 1000Euros that experts recommend that can cushion you against un-foreseen emergencies.

Some people find it hard to get motivated about saving, but it’s often much easier if you set a goal. This though may not be an easy task, especially if you are a spendthrift, and money seems to disappear in thin air immediately you get hold of it. The following guidelines may be of importance if you want to have a hand in savings:

Your first step is to have some emergency savings – money to fall back on if you have an emergency, such as a boiler breakdown or if you can’t work for a while. Try to get three months’ worth of expenses in an easy or instant access account. Don’t worry if you can’t save this straight away, but keep it as a target to aim for. The best way to save money is to pay some money into a savings account every month.

Once you have set aside your emergency fund, possible savings goals to consider might include:

  • Buying a car without taking out a loan
  • Taking a holiday without having to worry about the bills when you get back
  • Having some extra money to draw on while you’re on maternity or paternity leave

Possible money-saving tips for household bills

According to the Santander, they estimate UK households spend an average of £3,329 yearly, on their council tax, gas, electricity, water, and phone/broadband bills. Scottish law 

This is a huge amount that if you’re on a budget, should definitely look upon.

There are various ways you could save on your bills which may include:

  • Saving money on groceries
  • ‘Keeping meal costs down can be done without compromising on those important vitamins and nutrients… All it takes is a bit of thought and planning in advance of the weekly shop, you could also make a meal list for the week in advance, to be precise on your savings.
  • Cutting your bills

Reviewing your transport cost

Whether you drive or use public transport, travel costs probably make up a significant amount of your monthly spend.

However, don’t despair there are plenty of ways to cut travel costs including:

  • Finding cheaper car insurance
  • Buying cheaper fuel
  • Booking train tickets in advance

You could also reduce your sky channels package if you’re on a premium.

You could also try to avoid leaving the T.V on, when no one’s watching, or only switching on the heater when it’s extremely cold.

  • Reducing your home phone and broadband bill
  • There are a large number of suppliers out there and it’s easy to cut your monthly phone and broadband bills.
  • You could start by:
  • Directly calling your supplier and re-negotiating for better prices
  • On today’s age, you could use a comparison tool or website to find a better and affordable deal
  • Match your contract to your lifestyle – i.e. if you use a lot of data and are charged extra when you go over, a deal with more data might be cheaper
  • Avoid temptation- A simple decision, such as leaving your debit card at home while you’re on a budget may go a long way. You could also empty your change after every outing and put it on a jar. They may come in handy when you’re cash-strapped.
  • Reducing your home phone and broadband bill
  • There are a large number of suppliers out there and it’s easy to cut your monthly phone and broadband bills.
  • Start by following these simple tips:
  • Call your supplier directly and ask for a better price
  • Use a price comparison website to find a cheaper deal
  • Match your contract to your lifestyle – i.e. if you use a lot of data and are charged extra when you go over, a deal with more data might be cheaper
  • You could also try to increase your income streams by maybe utilizing on cashback sites, or collecting your loyalty points.
  • Pay your bills on time

As the saying goes, the earlier the better, with bills it’s much better and cost-efficient. Late payment fees can wipe out hard-earned savings, so make sure you pay your bills on time.

You can use these tips to help stay on top of your bills:

  • Pay for regular bills monthly by Direct Debit
  • Keep a record of payments and plan ahead
  • Talk to the people you owe money to if you’re struggling

Re-invest your savings

If you do follow everything to the latter, your savings may begin to grow. This may be good news and should encourage you to keep it up.

It’s probably wise to start investing your savings if they reach a certain amount. You may do this by:

Putting more money in your pension-this will be similar to investing in your future, and what better rewards than knowing you will live more comfortably when your old and can’t work.

You could also make an investment, maybe start a business or invest in shares for major corporations. This can increase your income streams and make you get a stable life.

If you’re overwhelmed by your debts

Often, the hardest part of paying off your debts is taking the first step.

It’s completely normal to feel bogged down and overwhelmed if your lenders are on your maybe you lost your job, or some unexpected event happened in your family. It’s pretty normal and you shouldn’t feel ashamed of it in any form.

The first step in breaking that feeling is picking those calls, or replying to lenders emails or letters. Explain yourself out and you could also send some papers to back you off, such as your statements or bills. by doing nothing, you could be making it worse for everyone in the family So, take a deep breath and open any letters you’ve been ignoring.

Once you’ve done this, at least you’ll know what you have to deal with and you can work out what you need to do next.

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