The New Year is almost here, and that means making some strategic plans for better success in the year ahead. Although plenty of people make different resolutions for different goals, like losing weight, or spending more time at the gym, one of the best resolutions you can make for your entire family, is the decision to start sticking to your budget.
Taking the time to learn how you can manage your money more effectively can be far more beneficial than you might think. Not only does it help you stay on top of your bills, but it could also mean that you end up saving thousands of pounds every year, which you can put towards anything you like – from a new television to a vacation for the whole family.
The Problem with Sticking to a Budget
The only problem with creating a budget in today’s world of instant gratification is that it can be very difficult to motivate yourself into managing your spending more effectively. For some people, in fact, sticking to a budget can seem like an impossible task.
While you might try hard, and do your best, the truth is that you’ll probably end up spending more money and saving a lot less than you need to, without some careful planning. To help you start your New Year on the right foot, we’re going to take a look at some of the ways you can improve your chances of sticking to your weekly, monthly, or annual budget.
Step 1: Figure Out the Ideal Budget
The first thing you’ll need to do when you’re starting with your new budget is figure out exactly how much you spend on things like:
- Household bills (gas, electricity, water, mortgage, rent, etc)
- Living costs (food, and other essentials like telephone and broadband bills)
- Financial products (insurance)
- Family and friends (gifts for Christmas, birthdays, etc)
- Leisure (Holiday time, weekends out with friends, restaurant meals)
- Travel (Car costs, petrol, public transport, etc)
Collect as much information as you can about your spending habits, then determine whether you’re spending more than you have coming in. If you are, you’ll need to start thinking about which parts of your spend you can cut down on.
Step 2: Get Everyone Involved
One of the easiest ways to improve your chances of success when it comes to budgeting is to make sure that you have everyone involved in working towards the same goals. It’s no good deciding that you’re going to cut down on restaurant meals if your wife continues to go for fancy lunches without you.
Sit down with everyone in your household, and work out how you can make a plan you can all stick to. You might even find it helpful to set a goal that’s motivating for everyone involved. For instance, you could look at how saving money will help you to enjoy a vacation together, or buy a new car without having to take out a loan.
Step 3: Be Flexible
Ultimately, while you might want to bring your spending down to an absolute minimum, it’s important to remember that life is unpredictable. That means you’re going to need to review your budget and re-think your spending whenever there’s a change in your life.
For instance, you might find your household bills increase, which means you need to spend less, or you might end up getting a pay rise. At the same time, make sure that you keep it real with the amount you try to restrict yourself by.
Say you give yourself £100 a month for restaurant meals, but you always end up struggling to pay the bills each month. Instead of cutting back entirely, try reducing your allowance to £75.
Step 4: Reducing Household Bills
Often, household bills can make up a large chunk of how much we spend each month. The good news is that you can easily reduce your spending by making a few simple changes. For instance, you could try shopping around for a new mortgage, or changing your energy supplier when you notice the prices are starting to rise.
Sometimes, something as simple as getting rid of the drafts in your home, or switching to energy-efficient appliances could be the key to success.
Step 5: Drop the Credit Card
Finally, if you really want to stick to your budget this year, then it might be a good time to get rid of your credit card for good. Ultimately, consumers spend a lot more when they use credit because they don’t feel the pain of using their money until the bill comes around a few weeks later.
Don’t let yourself get overwhelmed because you’re in a trance with delayed spending. Resolve to save more cash by sticking to debit payments, or handing over coins and notes.
**This is a collaborative post.**