Budgeting helps you pay for the necessities of life, and also escape debt, so you’re not relying on your credit card simply to get by. Using reliable figures for income and expenditure, you can transform your financial situation even if you currently owe money.
So what can you do to make 2020 a financially fruitful year? Here are 10 budgeting tips.
1. Set realistic goals
Setting a financial goal at the beginning of the year clarifies your aims and gives you purpose to improve your financial situation – maybe you want to be debt-free this year, or at least on a solid path to paying down your debt.
2. Include all your spending
Include birthdays, Christmas, and other major events in your budget, otherwise it won’t be accurate and you might have to draw on money that’s already allocated elsewhere, or use a credit card to pay.
3. Identify the necessities and the ‘nice-to-haves’
Budgeting allows you to live within your means so you can escape debt, build an emergency fund, and invest for the future, but depending on how much money is left at the end of the month you may need to separate your needs from wants to achieve your goal for the year.
4. Let technology help you
Numerous budgeting and personal finance apps exist that let you track your spending. Some send alerts if you’re about to go over budget, and provide a constant gentle reminder of your financial goals.
5. Stick with it and give yourself time to adjust
If you’ve developed a fairly strict budget it may take some time to get used to it and motivation could wane, but stick with it and it’ll soon become second nature.
6. Plan ahead for meals
Food can be a considerable expense but by planning your meals for the week ahead you’ll be more organised, avoid impulse buys, and save money.
7. Budget using jam jars
Old traditional ways are sometimes the best, and the jam jar method of budgeting can be very effective. You allocate money for your bills each month and put the physical cash into various labelled jam jars or pots.
8. Round up your spending
You can increase savings with little impact on your monthly finances by rounding up your spending and transferring the extra to a savings account. Some high street banks offer this facility, or you could use a finance app.
9. Use as many categories as you need in your budget
Don’t worry about using too many budgeting categories – they can show exactly how much you’re spending in reality. Under ‘recreation’ for example, you could itemise various hobbies or children’s activities to see whether you’re overspending in one area.
10. Adjust as necessary
Your budget isn’t set in stone and will develop alongside your life and financial situation. It’s a dynamic document that keeps you on track, so feel free to adjust the figures and categories as necessary.
Scotland Debt Solutions helps Scottish residents to escape debt, and can provide more advice on budgeting to help you get to grips with your finances. Please contact one of the team for a free same-day meeting – we work from offices around Scotland.
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In 2019, the Financial Conduct Authority (FCA) instructed banks to introduce a simpler fee structure for arranged and unarranged overdrafts before April 2020, namely a flat annual interest rate.
Our Scottish based team can help advise you on your debt problems.