Once – or even twice – a year the Chancellor presents his plan for the coming year on what the country will borrow, spend and collect in tax. If you’re feeling the pinch it’s time to do your own budget, this MoneyMagpie guide will show you how you can take control of your spending this year.
- Make your own budget
- Switch your bills to cheaper versions
- Improve your credit rating
- Other ways to save
- Don’t panic
First things first: find out what you’re actually spending money on. Keeping a spending diary is an excellent way of getting a snapshot of your daily outgoings and seeing where your money’s really going each month. It’s easy enough to do – all you need is a notepad and pen – or just use the Moneymagpie Budget Calculator to give you a quick lowdown on your monthly spending. Draw out two columns, one for incomings and one for outgoings.
These are the kind of things you should include in your incomings section:
- Tax credits
And these are the things you should have in your outgoings section:
- Utility bills
- Council tax
- Home phone/internet/TV bill
- Mobile phone bill
- Loans/credit cards
If in doubt, overestimate your outgoings and underestimate your incomings – to be really accurate get out bank statements and look through them. Make sure you include everything – even the little things you think aren’t important, like a Starbucks coffee or a packet of crisps – it all adds up. You might think that a packet of crisps only costs 60p, but a packet a day will add up to £4.20 and over a month you’ll spend over £15 on crisps. Sounds like a lot now doesn’t it?
Once you’re done, add it all up and you’ll have an estimate on your monthly outgoings and incomings. If you earn more than you spend – congratulations! We suggest you put the savings into an ISA or high interest savings account to make the most of it.
If you spend more than you earn, don’t worry, you’re not alone! Now you need to sit down and think about where you can make some serious savings. Check your regular direct debits and cancel any that aren’t necessary. Make a realistic budget for extras like shopping trips, going to the cinema and eating out.
Some areas you simply won’t be able to cut down on – you can’t stop paying your rent, or cut out your council tax for example, but other areas you’ll find suprisingly easy to reduce.
Here are some ideas to get you started:
- Switch your energy supplier. Use our price comparison pages and find out if you can save by switching.
- While you’re over there see if you can save by switching your internet provider.
- Pay your bills by direct debit – it’s much less hassle and you can often get a discount if you do this.
You might also consider getting a capped energy tariff – this means that you’ll be paying a fixed rate for a set period of time. They aren’t always the cheapest option, but they do give you the security of knowing exactly what your bill will be even if energy prices increase.
If you’re thinking of getting a capped tariff it’s essential that you use the Moneymagpie price comparison tool to find the best deal.
Check out our article on reducing your energy billto find loads of great tips and don’t forget to check your phone and internet supplier too.
The UK currently has a credit rating of AAA, but Fitch – one of the major global credit rating agencies has threatened that the UK might lose its AAA rating within the next two years. This means that Osborne is likely to advocate a tight budget on Wednesday in order to reduce the deficit.
But do you know what state your credit rating’s in? Having a bad credit rating means you’ll find it hard to get approved for credit cards, bank accounts and loans.
However, you can improve your credit by saving, making cuts where you can, and making sure any debt repayments are being made regularly and on time. For more read our article on 10 easy ways to improve your credit rating.
Check out your credit rating with CreditExpert. Their free 30-day no obligation trial lets you get a clear picture of your financial situation, and talk to their experts on ways you can improve it.
Do you have a contract phone or are you on pay as you go?
If you only use your phone occasionally then it might be worth ditching your contract entirely. Otherwise, why not switch from a phone contract to a sim-only one. This means you won’t get an upgrade each year, but if you switch from a £25 a month contract to a £15 a month one, that’s a tenner each month you can save, and £120 each year. Check out our article on finding the cheapest mobile contract.
This is another area that seems to cost a fortune. Here are some ways you can save:
Get a bike – this is an investment. If you don’t already have one find a cheap one on Gumtree, or invest in a nice one, use it to cycle to and from work each day and save yourself a fortune each week. In London, a return tube journey from zone 2 to zone 1 costs £5.40 with an Oyster card. If you do that five days a week that’s £27 a week, and £108 a month. Buy a bike for £200 and you’ll have made the money back within two months.
Public transport – If you have to use the underground then think about whether it’s worth getting a monthly travel card. This costs £112.20 from zones 1 to 2 in London – so to make the most of it you’d need to use it for more than just two journeys a day, five days a week. If you go into town during the weekends, or go out in the evenings this might be the thing for you. The more you use it the cheaper each journey gets.
Driving – Try car pooling! Try sites like carpooling.co.uk , which will reduce your carbon footprint and save you an absolute fortune on petrol. If there’s someone going the same way as you, why make the traffic jams longer? For more information on cutting your driving costs take a look at article.
The weekly food shop is getting more and more expensive. Don’t get caught out by paying more than you should for your food. Use MySupermarket to compare the prices of your food shop – you can even do your shop online with your chosen supermarket (Asda, Tesco, Ocado and Sainsbury’s), they’ll keep a running tab on how much your shop costs and then if it works out that it’s cheaper through another supermarket you can choose to switch with the click of a button. What could be easier?
Money is tight for everyone and there seems to be an enormous pressure to keep a luxury lifestyle that a lot of people simply cannot afford, especially after they’ve suffered a big pay cut or been made reduntant.
Don’t live your life worrying about what other people think about it. It takes guts to do it, but you have to be honest with yourself about what you can afford and where you should make cuts. If that means that you have to forgo a two-week summer holiday, or getting your hair styled less often then so be it.
If you think managing your money effectively is only for the professionals – think again. You can take control of your finances – it’s simple, straightforward and achievable with this guide.
Jasmine has teamed up with learndirect to create a great guide aimed at helping you get to grips with you money in just a few simple steps. And because we like to give you all the very best advice for free, you can download the guide right here and now, without paying a penny.