How To Manage Your Money |

How to manage your money is essential. Even more so the less you have. It may seem irrelevant as you don’t have any money, but managing your money is the key to getting out of any debt you may be in and having enough to live on.

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Managing Money Tips

You have done the first step and that was researching and googling how to manage your money. Let’s move onto the next step, knowing exactly where you stand. This might not be pretty but its something you got to do.

Keep track of all your expenses. Every single thing. Use your phone notes pen and paper or whichever way works best for you. List all the direct debits you have going out of your bank account. Check your bank statements to make sure you got them all. Then do the same for standing orders.

Make a note of all the times you pay for something. A trip to the supermarket, note it down. Back again the next day as you forgot things, note it down. The coffee on the way to work, note it down. The money the kids needed for a trip, note it down. You can probably see where I am going with this.

Your list might look something like…

Asda £12.97
Petrol £43.89
Rent £750.00
Electric £78.00
Asda £67.90
Asda £23.89
Credit Card Payment £78.00
Coffee £3.50
Asda £54.89
Coffee £3.50
Total £1,116.54

Once you got all the info put it into categories so that it’s not quite a jumbled mess. So utilities, mortgage/rent, groceries, credit cards, days out etc. Have a look through all your categories so that you can see if there is anything missing or doubled up and just not looking right.

So using my above example my categories would be…

Groceries – Asda
Travel – petrol
Utilities – electric
Repayment – credit card
Luxury – coffee

The idea behind having categories is that you can now prioritize things easier. Utilities and mortgages/rent are things you have to pay each month so these will be recurring. Coffee on the way to work, although probably rather essential in your eyes, could be considered a less important purchase and could be sidelined when times are tough.

Nest lets create a budget.

How To Budget

How to budget your money is so very grown up but it can be really useful to help you save for bigger things in life from a deposit on a house to new pair of shoes that you don’t really need but are so gorgeous you have to have them.

Looking at all your outgoings list out all your items again but this time the total amount spent in the month. Things like rent will only have one amount so that’s what your budget is.

Things like groceries will have several amounts so add them together to give yourself a budget.

If I use the above example my budget would look like this…

Groceries – £160 (£159.65)
Travel – £45 (£43.89)
Utilities – £80 (£78)
Rent – £750 (750)
Repayment – £80 (£78)
Luxury – £10 (£7)
Total Budget £1,125 (actual spend last month £1,116.54 )

My example is only a brief one to give you an idea but I can see on my budget I haven’t got things that don’t go out every month but need to be paid. Things like car tax or car maintenance. So I would need to add in those and allow for them in the budget.

You can also alter your budget to suit you. So if coffee is an essential every week adjust your budget to reflect more coffees. On mine, I also use a larger electricity budget as I am all electric so my heating costs come out of my electric. The electric figure I have in my example doesn’t include keeping warm in the winter. So I would add higher winter months to lower summer months and divide across 12 ( months) to give an average for the year.

Now the really sensible and adult bit, add in a savings budget. Whoah that’s really grown up, isn’t it? The recommended amount is 10 to 15 % of your income. If you can afford that out it in. Now if you can’t afford that doesn’t scrub the saving budget from your list. Anything and I mean anything is better than nothing.

So now you have a list of outgoings that are into categories and a budget. Well done. Pat on the back and all that.

Now we have to do your income.

If you have just one wage and no benefits to take into account its easy with one figure. You have the simple task of taking your total budget away from you wage figure.

If you have more than one job and/or benefits to take into account you need to add them all together. You also need to make a note of things that might change these figures like children going to university ( benefit help to you stops) or if children living at home are about to get a job ( some benefits are affected).

Once you have a final income figure take the budget figure away from it. Hopefully, you have money left over so a little adjustment on your budget is all that is needed.

Maybe you can add a second savings budget for a larger goal like retirement or a house, leaving your smaller savings for holidays or smaller goals. Or maybe you want to give to charity.

What if the figures don’t work out and you don’t have enough to cover your budget?

First, don’t panic. You might have added something up wrong. Go back and check your figures.

Check your budget. Where can you reduce the figure down? Coffee is my first thought on the example budget. Look at all your categories and reduce or remove all the nonessentials. Things like the coffee on the way to work, the gym membership you never use etc. Then look at the remaining amounts and see where you can reduce more. Maybe your Sky package isn’t the cheapest one you could be on. Or maybe reduce your mobile bill. Check to things like your electricity to make sure you are on the best tariff with the best company with sites like Compare the Market and Money Supermarket.

If the figures are still not adding up maybe look into How To Earn Extra Money. They are hundreds of legitimate ways you can earn extra money. It might take just one to make your figures work out.