As 2017 draws to a close it’s almost time to reflect on the last 12 months and start making plans for the year ahead. Each year we say we’ll start doing this, or stop doing that – only for our plans to get ditched sometime in January. But what if this year you set realistic goals and resolutions that are actually achievable?
Christmas is an incredibly expensive time, and if like most people you end up overspending during the festive season, January is the perfect time to get your finances in order and start off the New Year right. Just the word ‘budget’ is enough to bring out a groan in most people – however, the reason most budgets don’t work is because they are simply unachievable, and when people place such high demands on themselves they are basically setting themselves up to fail.
Not this year, though! Here we take a look at the best ways to plan your budget for the year ahead, make sure you stick to it and save yourself some serious pennies along the way, too…
Look at the bigger picture
Start things off by deciding who exactly you are budgeting for and why. Are you planning your own budget, or are you organising your family’s budget too? Ideally you want to be planning your budget for the entire year, so make sure you’ve got your last three months of bank statements and bills to hand. What is your monthly household income? And what are your outgoings? Make sure you use worst-case scenario figures instead of underestimating your spending habits so you can ensure you’re completely prepared.
Drill down and be specific
Be detailed in your budget so you know exactly what’s going where – and why. Broad categories such as ‘car expenses’ make it easy to forget the little things that add up. Instead make sure you note down every last detail, from MOTs and new tyres to petrol, insurance, breakdown cover and more, so you can have a full overview of exactly where your money is going every month.
What can I afford to spend?
Once you know where you’re spending your money, you can start to prioritise what’s important to make sure you stay within your means. We’d recommend recording what you’re spending daily or taking out a certain amount of money to last you a day as well as always paying in cash to make sure you keep on top of your spending.
You know the saying every little helps – well it’s true when it comes to saving, too. Little lifestyle changes here and there can make a huge difference, from cutting out your daily takeaway coffee (which could save you a whopping £650 a year!) to other little daily expenditures such as magazines, chocolates, cigarettes, and parking. Every time you make a purchase, ask yourself two questions: Do I need it? And if so, could I do it more cheaply? Yes, you might be watching movies on Netflix rather than taking trips to the cinema, swapping Sky for Freeview or giving up holidays abroad in favour of staycations – but you’ll be surprised at how quickly the little things add up and your savings start to grow.
Make allowances for special occasions
Is there anything specific you need to save for, such as a summer holiday, birthday presents or Christmas? If so, factor it into your budget throughout the year rather than just splurging in one go or even worse spending on credit. For example, if you typically spend £800 a year on Christmas put aside £67 a month over the course of the year so you’re ready and prepared come December next year.
A really important part of successful budgeting is to be a smart shopper. Compare prices online, use vouchers and promotional codes where possible and make the most of reward schemes, too. When it comes to online shopping, use click and collect if you can instead of paying for delivery and when you’re doing your food shop try to plan meals ahead so you don’t waste anything. It’s also worth using money saving sites such as MySupermarket to see which products are the cheapest and where.
Use budgeting apps
There are tons of tools out there to help you budget, with money management apps such as Mint, Wally and You Need a Budget making it easier than ever before to watch what you spend. These apps act as an all-in-one resource for managing your money, allowing you to sync your bank accounts, credit cards, and monthly bills to one account and get a snapshot of what’s going on with your money at any one time. You can track what goes in and what comes out as well as sorting your spending into categories so you can figure out exactly what you are splurging on so you can keep on top of it all.
Why should you budget? Well, to put it simply, budgeting in this way and watching what you’re spending and where means you’ll have more money in your pocket to enjoy life. The typical savings from implementing a budget are between £3000-£5000 – so it’s more than worth having a go in 2018.
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