In order to take control of your finances and spending, creating a budget is key. It means you don’t have to worry about paying last-minute bills, ensure you save and put money towards the things that matter to you.
Being an adult can be challenging, there are a million things to do and a lot of the time managing your money slips to the bottom of the list. Plus with the ease of contactless payments and online shopping, it’s easy to overspend and find yourself waiting for your next payday.
It’s not always easy to stick to a budget! So make one that works for you with our better budgeting tips below.
1. Calculating your budget
Calculating and understanding your budget is the first, most essential step. To start you need to calculate your monthly income, including all sources of revenue, this might include:
- Investments / Property
- Government Grants
- Universal Credit
Then you need to do the same with your essential expenditures, things like:
- Rent / Mortgage
- Household Bills
Simply now add up your income for the month and minus the sum of your essential expenditures. If you’d like to have a weekly budget you can divide this by 4 to have a more controlled idea of your spending. The amount left over is for you to decide between saving + your disposable income.
2. Saving rules
A huge part of budgeting properly is cutting down non-essential spending and limiting luxuries to make them more affordable. A good way to determine just how much of the spending needs to stop is by using the 20/30/50 rule.
The 20/30/50 rule is when you immediately put 20% of your earnings away as savings, then you dedicate 50% to your essential spending and the last 30% goes towards everything else. This leaves you with a more realistic budget and helps you avoid any stress about late bill payments or not having the food in the fridge.
3. Tech can help
Nowadays it’s so much easier to save your money with the help of modern technology. There are some apps that help you analyse and review your spending and others that even go the extra step and begin saving for you!
Snoop helps you save money by tracking your expenses and suggesting cheaper alternatives. For example, you have a phone bill that you’re paying £40 a month for and you spend £50 a month on Tesco shopping. Snoop will then suggest other phone network providers with cheaper deals on the same phone and inform you of discounts applicable at Tesco.
Plum links to your account through open-banking and uses an AI assistant to monitor and analyse your spending. It then determines how much you could be saving each day and automatically sends it to a saving account for you.
Some banking apps can also help with budgeting and monitoring your spending. Outside of the obvious generic bank statements, some banks also split your spending into categories for review. Some send you notifications when you make a purchase so you know if your card is being used and some even allow you to block yourself from spending on certain things! Here’s a list of highly recommended banks that boast all of the features listed above:
4. Investing Apps
Finally, sometimes the smartest thing to do with any savings is invest! Don’t let it sit around in a bank’s savings account – begin investing in different avenues to grow your wealth. Usually traders suggest that you never invest more than 10% of your total capital. Using the 20/30/50 rule we have decided to put aside 20%. This means it’s safe to say you can put half of that into investments and keep the other half in your savings account as a plan B. Here are a few apps you can use to learn about the basics and begin investing from scratch:
- EToro – A trading platform where beginners can copy the investment patterns of experienced investor.
- Invstr – An app where you can learn from a community of investors and get practice investing before using real money.
- WealthBase – A fun social trading environment with interactive games and a stock simulator.
- Acorns – A platform which invests spare change when purchasing by rounding up to the nearest pound. Acorn invests for you so no need to sweat the complicated stuff.
- Stockpile – A site / app that allows you to buy fractional shares of companies – the best way to invest small amounts of money.
We help to simplify people’s everyday lives by removing the stress (and fuss) of household finances. Want to know more? Click here