Was your goal this year to be better with money? If you have found yourself slacking with your budgeting don’t worry, because the new tax year is fast approaching – and you can use this as a fresh start! Here are some handy tips on how you can manage your money successfully.
Boss your budget
Do you ever take time to sit down and calculate exactly where all your money goes? If not, following the 50/30/20 rule could help you manage your budget. Simply put, it enables you to track and divide your expenses into three main categories: needs, wants and savings/debt. It’s an easy way of tracking your spending without having to waste too much time worrying about the smaller details of your finances.
To start, you need to know your monthly income after tax – that’s usually the net pay figure on your payslip. From that figure, 50% goes to your ‘needs’ spending, 30% for your ‘wants’ and 20% for savings or debts. Use your discretion to determine what fits into each category – but remember that needs are expenses that must be kept in your budget no matter what. These will include utility bills, housing and transport costs, as well as food.
Your wants, on the other hand, are things such as nights out, holidays, shopping trips and memberships to the gym, for example. If you can live without it, it’s a want rather than a need. The final category, savings/debts, is there to help you set money aside for your future, or to assist in paying off any debt faster than required.
Prepare for a financial emergency
In life, we never know what surprises might pop up, so it’s important to have a safety net. Financial advisors recommend building up between three to six months’ worth of outgoings, which will come in handy should you face an unexpected hefty bill. If the worst happens and you don’t have any savings stashed away, you may need to borrow money. In which case, ensure you do your research and opt for a trusted lender.
Work towards a goal
Different people dream of different things. Some may long for a holiday home on an exotic island, while others may simply want to renovate their kitchen. Whatever your plans for the future, it’s always beneficial to set yourself a goal and work towards it. Knowing that there is a reward at the end will help to keep you motivated when it comes to saving money.
What are you going to start saving for?