With both Christmas and New Year’s celebrations so close together, our finances can take a big hit over the festive season. We’re taking a look at some thrifty ways you can keep track of your finances.
We’ve all been there – counting down the days until payday, so that you can relax in the knowledge that your bank account will quickly move from ‘red’ to ‘black’ overnight. Around one third of British workers are living from ‘payday to payday’ according to a survey by CareerBuilder, and worrying about finances can lead to increased stress and anxiety. Sometimes, all it takes is a little planning and organisation to keep on top of your finances so that you know where your money is going, and perhaps find ways to improve your financial situation.
Track your spending
It might sound a little tedious, but tracking your spending is the best place to start when it comes to finding out where your money is going. Start by reviewing your spending over the past 1-3 months and analyse where your money is going.
Be organised – keep a spreadsheet or use an online budgeting tool detailing your incomings versus outgoings, and include the dates when regular bills are paid such as Direct Debits and standing orders for mortgage/rent and utilities.
Audit your spending
Once you have tracked your spending and analysed your incomings and outgoings, seeing it all in front of you on screen or written down makes it easier to visualise and therefore easier to see where possible cuts could be made. For example, could you reduce your grocery bill by switching to online shopping or shopping at a lower cost supermarket? If you are struggling to make ends meet whilst paying off debts, it may be worth seeking professional advice from organisations such as StepChange or your local Citizens Advice Bureau, who can provide advice on any extra benefits and allowances you may be entitled to, offer practical support and, if necessary, help you draw up a debt repayment plan.
Set a budget
…and stick to it! If you can’t afford something, don’t be tempted to purchase it on credit. You may come to regret this decision as debts can soon mount up if you keep using your credit card for ‘one off’ purchases and treats.
Be strict with your budget, and make sure your budget covers your ‘needs’ like rent and paying back any outstanding debts, before your ‘wants’ such as that new winter coat or mobile phone you may have your eye on.
Find ways to lower your bills
Use an online comparison service to find ways to lower your bills, including power and telecommunications. Many utility companies offer discounts for paying by regular Direct Debit. This way, you can budget and understand better what is coming out of your bank account each month.
Save, save and save!
If you have a little leftover each month, save as much as you can afford to. Set yourself some savings goals to stay motivated – such as saving for a new home, holiday or car, and work towards this. Once you get into a good savings routine you will notice that even putting away a small amount each week all adds up – there are 52 weeks in a year after all! Not only that, but consider that there are many expenses which are irregular or unexpected – such as car MOTs and services or repairing a broken boiler, and having money set aside to pay for these when they arise will help save a lot of stress and worry.
Use cash
The physical act of handing over cash instead of plastic has a psychological effect on the brain – research has found that we acknowledge how much money we are spending in cash and feel more ‘psychological pain’ in doing so. Therefore, it’s easier to lose track of spending when using credit or debit cards as there is less ‘pain’ attached to the purchase. When you use cash for a purchase, no matter how big or small, you’re much more aware of your spending – and much less likely to splurge. After all, it’s impossible to spend cash that you don’t have!
And finally: Don’t do it all alone. Admitting you’re in financial trouble can be difficult or embarrassing, but the longer you ignore the problem, the worse it will get, and you could continue living ‘payday to payday’ for a long time. Get support from your spouse, partner, family or friends, because telling loved ones and people you trust about your financial worries can ease the burden.