Did you know one in three household in the UK experienced financial difficulty last January due to spending too much over the festive period? The survey from the Money Advice Service also shows people want that to change but have a bit of a hard time figuring out why. So let’s survive January together! Here is a list of 10 things you should do to get your finances back on track.
For more information, check out the Beginner’s guide to managing your money the Money Advice Service put together.
1. List all your sources of income
How much money can you count on on a regular month? There is your salary, that money your neighbour pays to use your parking space, the extra hours you do every Tuesday, interest from money you have in the bank, rent from tenants, etc. If any source of money is not guaranteed, don’t count on it. Better budget with less.
2. Make a list of your expenses
Now look at your expenses. There are the things that are set every month, your rent or mortgage, insurance premiums, your phone and internet package, electric bill if you are on a fixed direct debit…
Then there are the things you need every month, but whose amount changes, such as groceries, petrol,
3. See what you can cut
Without affecting your lifestyle, you can probably cut a lot of expenses. If you have a magazine subscription but don’t read every issue, cancel it. Buy the magazine when you know you will read it. Do the same for gym memberships, your cable bill, and everything you don’t get value off.
4. Reduce the cost of what you can’t cut
It is easier than you think to negotiate your bills. Even your landlord will happily give you a few pounds off rent if you have been a good tenant and you tell him times are tough. I know that because that is what I do for the sake of keeping good tenants. I also call my internet provider every year to remain on the new customer discount. It takes 10 minutes and saves me about £240 over the year.
5. Pay less on your debt
If you have a credit card balance, see if you can transfer to a 0% and pay no interest for a few months. Keep making the same payments and your principle will shrink in no time. Also look at better rates for your mortgage and consumer loans. That can save you thousands over the life of the mortgage.
6. Cycle to work
Or run, or take the train. Companies have incentives for you to buy a tax free bike if you want to start cycling to work. Free exercise (since you cancelled that gym membership!) and no petrol costs.
7. Bring your lunch to work
Instead of going out for an £8 meal, or even a £5 sandwich, and being £100 behind at the end of the month, bring leftovers from home. Healthier, heartier food will give you energy to focus all afternoon.
8. Reduce waste
Wasting food, energy, water, is like setting money on fire. Look at the food you throw every week and stop buying so much. It takes a little while to fine tune but you can save hundreds. Turn the lights off when you leave the room, don’t let the water run while you brush your teeth, etc. Again, we are talking about easy habits that won’t affect your lifestyle, while saving you money.
9. Look for deals
If you really want to go out or do something fun, look for deals. They are all over. Get 2 for 1 at hundreds of attractions if you take the train, go to a free museum, eat earlier so you can still get lunch prices instead of dinner… With a little research, you can have just as much fun while spending a fraction of what you used to.
10. Make your money work for you
Many of us just have money sitting in our bank accounts. Set up easy transfers so the money left at the end of the month (if you follow these tips, there will be some!) goes directly to pay off your debt, fund your ISA, or at least go to an easy access savings account. Again, every little help, and at the end of the year you will be much better financially.