Taking the time to manage your money better can really pay off. It can help you stay on top of your bills and save £1,000s each year. You can use these extra savings to pay off any debts you might have, put them towards your pension, or spend them on your next car or holiday. Read on for money management tips, including how to set up a budget, sticking to it and how to save.
- How to set up a budget
- Getting your budget back on track
- Paying off loans and credit cards
- Set a savings goal
- If you’re overwhelmed by your debts
How to set up a budget ? Account dashboard
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The first step to taking control of your finances is doing a budget.
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.
Setting up a budget means you’re:
- Less likely to end up in debt
- Less likely to get caught out by unexpected costs
- More likely to have a good credit rating
- More likely to be accepted for a mortgage or 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
What you need ?
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. Manage your money better with our Budget planner tool.
To get started on your budget, you’ll need to work out how much you spend on:
- Household bills
- Living costs
- Financial products (insurance…)
- Family and friends (presents…)
- Travel (car costs, public transport…)
- Leisure (holidays, sport, restaurants…)
A great way to work out your budget is with our free and easy-to-use Budget planner.
Just grab as much information as you can about your income and spending (bills, bank statements…) and get started.
You can save your information and come back to it anytime you like.
Alternatively you can set up a budget using a spreadsheet or just write it all 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.
Getting your budget back on track
If you’re spending more than you have coming in, you need to work out where you can cut back.
This could be as easy as making your lunch at home, or cancelling 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.
Get everyone involved
Get everyone in your family involved with keeping to a budget.
Sit down together and make a plan that you can all stick to.
Work out how much spending money is available and agree between you what you’ll each have.
Cutting your household bills and your mortgage
For many of us, household bills make up a large chunk of our spending.
The good news is that it’s easy to save hundreds of pounds off your bills by following our tips.
You can also save hundreds and even thousands of pounds by shopping around for a new mortgage, or reviewing the one you already have.
Life is unpredictable so try to review your budget and your spending if there’s a change, or at least every couple of months.
You might get a pay rise, which means you can save more, or you might find your household bills increase.
Paying off loans and credit cards
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.
- Credit cards
- 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.
So even if you’re focusing on paying down another debt, you must pay at least the minimum on any credit cards and your monthly required payments on any loan agreements.
Getting help if debt problems become serious
If you’ve already missed credit card or loan payments or if you’re behind with so-called ‘priority debts’ such as your:
- Court fines,
- Energy bills,
- Council Tax,
- Child support
Take advice from a free debt advice charity straight away.
Set a savings goal
Some people find it hard to get motivated about saving, but it’s often much easier if you set a goal.
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’ve 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
Investing your savings
As your savings start to grow, you can:
- Put more money into your pension. It’s a great way to make sure you’ll be able to live more comfortably later in life.
- Make an investment plan based on your goals and timeframes.
If you’re overwhelmed by your debts
Often, the hardest part of paying off your debts is taking the first step.
It’s easy to feel overwhelmed if you know you’re struggling financially.
It’s tempting to bury your head in the sand and ignore your bank statements and demands for payment, but it won’t make the problem any better and could make it worse.
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.
Read a transcript of this video (DOC 22KB)
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I recently came to a startling realization – even though I’m making more money than I have ever earned before in my life, I’m not making nearly as much financial progress as I’d like.
Sure I’ve put a little “extra” (above my monthly budgeted amount) toward my debt and/or savings, but I’m nowhere near where I thought I’d be at this point in my journey.
I started living on a budget to pay down debt and build savings in January 2014 and I’m nearly 2 years into this journey without much to show for it. I’ve paid off a few small balances on credit cards, but I’ve also made some money (and life) mistakes along the way.
As much as I love being single, one thing that really stinks about it is having no one to help me stay accountable to my budget and financial goals.
For these reasons, I decided it was finally time to seek some help with my finances. If you are in the same situation, here are a few things you can do to get help with your finances.
When you’re married or in a serious relationship, you have some built-in accountability for your finances and other life goals, but when you are single it can be hard to keep yourself accountable with no help. For that reason, I sought out an accountability partner to help me stay on-track with my financial goals.
I found a fellow personal finance blogger who was also needing some help reaching her financial goals and we decided to “team up” to make it happen. We email and text each other several times a week about our spending habits and whenever we are feeling tempted to spend money on things outside of our budgets.
Chris Peach Tip: A good accountability partner who someone who is good w/ money and someone you need to learn from – They’re usually not your shopping buddy!Click To Tweet
If that’s not enough for you to get your finances back on track, or you think you have some learning to do, consider taking a course to help kickstart you toward reaching your financial goals. Chris’ online course is an awesome way to learn about budgeting, saving, investing, and more. The first round of his course begins at the end of the month. You can learn more here.
Another way to help you get help with your finances is to hire a professional. You can hire a budgeting or debt coach to help you formulate a personalized plan for your budget and finances, or you can go a step further by hiring a Certified Financial Planner. Personally, this is the last step I would take if you are in debt. Hiring someone with knowledge is great, but it does cost more. This cost will slow down your debt progress somewhat, so if you can find help without spending much (or any) money, I’d definitely give that a try first.
Chris Peach Tip: If you’re looking for a professional to sit down with you and you don’t have the money to hire someone, look inside your local church. Many times the church will work with or know someone who can sit down with you at no charge to you.
Admitting that you need help with your finances should not make you feel ashamed. Many of us were simply not taught how to budget, save, or invest wisely and were left to make these decisions with little, or no, education. Some people are able to figure these things out for themselves, but others of us, like myself, need a little help and accountability to keep our finances on the right track.
Have you ever sought help for your finances?
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When you owe a lot of money to a lot of creditors and feel like you’ll never be able to pay it all off, the first step on the path to financial freedom is to say “I need help with my debt.” Being in debt feels horrible and for many people it’s an embarrassment. But once you raise your hand and admit “I need help with my debt,” you’ll find there are plenty of resources for people in your position — and plenty of people who need the same kind of help.
At American Consumer Credit Counseling (ACCC), we offer free credit counseling and low-cost services to consumers who are ready to say “I need help with my debt.” Our highly trained and certified credit counselors can clear up any confusion around your finances, help you evaluate your financial situation, and go over all of the options for paying down your debt — from debt relief loans to debt settlement programs and debt management plans. We’ll help you choose the avenue that will work best for your situation and goals, and provide you with ample educational materials to help you manage your money more effectively.
I need help with my debt consolidation plan.
Often, one of the first things that people ask when they come to us is “what are my credit card debt options?” Typically, consumers want help consolidating debt, which means taking out a new loan to pay off a number of other debts. The hope is that with a lower interest rate on a new loan they’ll save money, and with just one loan payment to make, they’ll stay current with their creditors more easily.
But debt consolidation is not for everyone. If you have a lot of debt, you may not be able to secure the low debt consolidation rates that this approach depends on. And consolidating debt doesn’t necessarily help you reduce it — consumers taking out consolidation loans often find their debt remains the same or actually increases over a period of a couple years. Your ACCC credit counselor can help you decide if debt consolidation makes sense for you.
I need help with my debt forgiveness efforts.
Debt forgiveness is another potential strategy for anyone ready to admit “I need help with my debt.” This involves paying your creditors a lump sum payment that is less than what you owe and ask them to wipe out your debt. While this is sometimes effective, it can also backfire and add even more debt to your totals. While ACCC does not get involved in debt forgiveness plans, we can help you understand the benefits or potential risks this approach may pose.
I need help with my debt management program.
For many consumers who realize “I need help with my debt” and who come to us with questions like “How do I manage credit card debt more effectively,” we often suggest a debt management program. Under this approach, you’ll make one payment each month to us and we’ll pay all your creditors for you. This ensures timely payments, simplifies your finances and lets us work with your creditors to reduce interest rates and finance charges.
When you’re ready to say “I need help with my debt,” contact ACCC for a free credit counseling session where you can also get answers to questions like “What is a unsecured credit card?” and “How do I pay off credit card bills?”
I surrender my financial affairs and concerns about money to your Divine care and love.
I ask that you remove my worries, anxieties, and fears about money, and replace them with faith.
I know and trust that my debts will be paid and money will flow into my life.
I have only to look to nature to see proof of the abundance you provide.
I release all negative thoughts about money, and know that prosperity is my true state.
I commit to being grateful for all that I now have in my life.
I learn to manage my finances wisely, seeking help where needed.
And finally, I ask you to help me understand my purpose in life and to act on that purpose with courage and strength. I know that prosperity will come, in part, by doing work I love. Please help me use my skills and knowledge to be of service in the world.
Thank you, God.
Praying is the most effective way to invite God to work miracles in your life. Here are some more of our favorite prayers offering spiritual guidance to help steer you on your path as you grow in your faith.
The Apostles’ Creed
The Serenity PrayerThe Lord’s PrayerA Birthday PrayerPrayer of ThanksgivingPrayer for Inner Peace and Calm