By Laura Rettie, Personal Finance Journalist. Last updated 2nd February 2023.
Whether you’re looking to save for the future, get a grip on your day to day finances or tackle your debts, we can all benefit from improving the way we manage our money.
While the financial challenges faced by each of us may differ, following these three straightforward steps will help anyone to achieve their financial goals.
Your budget is your total monthly income minus your regular outgoings. There are lots of budgeting apps and tools available to help you work this out, but using a simple spreadsheet can also be just as useful as a starting point.
Before you start, be honest with yourself about your spending habits. Creating an unrealistic budget that’s too difficult to stick to isn’t helpful.
Once you create your budget, track your spending regularly and adjust your budgets for any unexpected outgoings or an increase or decrease in income.
Your outgoings should include:
Next calculate your annual expenses, such as birthday and Christmas presents, holidays, an MOT, or ground rent etc.
Total up your annual expenses divide by 12 to provide a monthly average figure.
Add your regular expenses to your monthly average one-off expenses to help make sure you’ve covered everything.
When you subtract your monthly outgoings from your monthly income you should have some money left over (if not, steps two and three are critical ASAP).
Divide any leftover money between savings and recreational spending.
It’s recommended to save at least 20% of your income each month, however paying down debts, especially interest bearing debts, should be your priority before putting money away in a savings account.
For more information on creating and sticking to a budget, check out our budgeting explained guide.
Taking on extra shifts, getting a new job that pays a higher salary or negotiating a pay rise are three ways to increase your income, but there are other things you can do, including:
Families need help looking after their beloved pets and are willing to pay for people who will help to look after them.
Sell your old mobile phone, empty iPhone boxes and unused instruction manuals. You might be surprised how much your old Lego can fetch on second hand good sites like eBay, Gumtree and Facebook marketplace.
To check your eligibility for benefits visit Turn2us.
Earn cashback while spending money
Closely inspect your outgoings to find where you can make some cut backs or savings.
These small changes all add up and can help you to achieve your goals quicker.
However, there are situations where saving a few pounds here and there won’t cut it. If you’re seriously struggling to pay your bills, take a look at the Gov.uk website for any benefits or cost of living support you maybe entitled to.
We're not good at talking about our finances openly in the UK, let’s face it, we'd much rather chat about the weather. Money is often a taboo subject and historically it’s been viewed as impolite to talk about it.
But that's got to change because looking after your money is just as important as looking after your mental or physical wellbeing. Your financial health should be a priority and we need to normalise putting the topic front and centre of everyday conversation, as uncomfortable and awkward as it might feel to begin with.
The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.