Manage your money and see the savings roll in

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by: MarkeD
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Word Count: 791
Date: Wed, 24 Mar 2010 Time: 7:30 AM
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Are you getting to the end of each month and relying on your overdraft? Failing to save despite always feeling like you are scrimping?

If that's you, then it's time to budget.

Of course, self-denial is no-one's idea of fun and accounting for every penny you spend is a little too much like hard work. But it's also pretty boring having to stay in at the end of every month, or never being able to treat yourself, all because you don't budget properly.

Manage your money well and your life can become a lot more exciting, as you get to spend your hard-earned cash on things you like.

Rip-up the rule book

There are certain rules around budgeting that are easy to obsess over, such as saving at least 10 per cent of your income, sticking religiously to set budgets for different areas of your life, and keeping track of every penny. But they don't always help. If you pay your bills, put enough money into your pension, have some emergency cash in instant-access savings, and additional savings for treats, it really doesn't matter what you are spending the rest on.

In reality, we don't all have our finances so neatly sewn up, but you can reduce your outgoings without reducing yourself to tears.

What are you spending?

Sounds like an easy question but it's amazing how many people don't have a clue how much of their income, even roughly, they spend on transport, socialising or bills for example. Look back over your statements for the last few months and work out where your money is going. It could be clear where you need to cut.

Choose what to chop

Many people struggle to maintain a new budget because they try to change too much at once. If you make yourself miserable you're more likely to spend to cheer yourself up. Take the pain out of budgeting by focusing on three things you'll cut back on. This might be slashing your household bills, cancelling your gym membership and socialising less. Choose things that fit your lifestyle so, if you would find it impossible to cut down on nights out, decide to chop your weekly food budget instead.

The bigger picture

We all know that cutting down on small things can make a significant impact on your finances. The well-worn example of £3 spent on coffee each working day costing £750 a year proves you can save hundreds. But while sacrificing life's small treats can add up, chopping larger expenses has a bigger and quicker impact. Cancel your gym membership and satellite TV and you could save £100 a month. Even better, drive a cheaper car or forgo your annual holiday and your disposable income will soar.

Easy cuts

The best way to rein in your spending is always to minimise the boring bits, such as household bills. After all, an expensive electricity tariff can't make you happy like an expensive pair of shoes can. One afternoon spent going through all of your household bills could easily save you hundreds if not thousands of pounds a year - money in your pocket. Switch and save on your gas and electric, broadband, home phone and mobile, and stop wasting your hard-earned cash. And move them all to monthly direct debits - not only is it often cheaper, you'll never incur a late payment charge again.

Big money

If you really want to chop your major expenses, take a look at your financial products. They can offer even greater money-saving opportunities and it doesn't take long to search the market and find a better, cheaper deal. Your mortgage offers big potential savings but you could also be paying hefty interest on your loans and credit cards. Save even more by switching your car, home and life insurance.

Save something

Saving is the cornerstone of budgeting because it gives you the means to treat yourself guilt-free. Having enough money in an easy-access savings account to see you through a few months of unemployment is a good starting point for most people, and don't neglect your pension. After that it's up to you - either set up a standing order to transfer a set amount each month or just shift it over as it suits you. But always make sure that every penny in credit works hard for you by searching for the best savings, and indeed current account available.

About the Author

Read more about savings at http://www,confused.com