UK household finances are under more strain than ever. With inflation set to rise in the coming years as the economy recovers, improving our spending habits is essential.
From managing your budget to saving and tracking expenses, we offer some insightful tips to improve your spending habits.
Assess your income and outgoings
The first thing you should do when trying to change your spending habits is to assess your incoming and outgoing finances.
This will help you to analyze where your money goes on a monthly basis and which expenses are essential and which are not.
Seeing your income and outgoings in one place can help you realize where your spending habits need improving.
Prioritize your spending
Prioritise where your monthly income needs to go. Housing, food, and utility bills should be top of the list.
Then, analyse where else your money goes and put this list in order of priority. Be cutthroat with yourself and move anything frivolous to the bottom of the list.
Make a solid budget
With your priority list in hand, you can make a cohesive budget that accurately represents where your money needs to go.
It is important that you are accurate with your budget. Make sure outgoings are recorded to the penny, so you can stay on top of your finances.
Using a spreadsheet or budget app to help you record and manage your budget.
Have a savings goal
There’s no knowing when you might run into financial hardship or need to pay out for something in an emergency.
A savings goal will help you to build up a safety sum for such occasions. Having savings is a good idea if you want to buy a house in the future, as lenders require hefty deposits.
Give yourself an allowance
Giving yourself a separate allowance for spending is a good idea. This should be granted from the funds left over after your budget and savings have been allocated.
You can set up a monthly payment from your main account to this e-account, and factor your allowance into your budget properly.
Keep track of your expenses
Recording your monthly expenses will help you to understand your spending habits more deeply.
Your budget app may have a feature that you can record spending in and suggest ways to reduce spending.
No matter how you choose to record and manage your money, developing good money habits will help you in the future.