Do you ask yourself how to properly plan your budget and save money? Review your spending or make sure that you are doing everything correctly.
Life hack # 1. Plan your budget for a year ahead
You should have a clear idea of your finances in your head. Ask yourself some key questions: how much do you earn, what will be the average income per month and then – per year, how much do you spend, does the balance between debit and credit converge? It is important that you not only have enough for all your needs, but also manage to save for the future.
Sit down and write down your big plan of spending for the next year. Ideally, do it just before the New Year.
- Spending: £4000 for vacation, £2000 for insurance, £2000 for the purchase of clothingand so on.
- Thanks to this simple exercise, you will see the picture: how much money you need.
- Divide the resulting amount by the number of months and find out how much you need to earn and save.
Life hack #2. Distribute spending by the formula
The ideal family budget formula is 50-30-20:
- 50% is your obligatory payments (loans, food, utility bills, planned medical examinations, etc.),
- 30% – “pleasant expenses” (clothes, shoes, purchase of equipment, travel, manicure, beautician, restaurants),
- 20% – investments (accumulation and from the same funds – charity).
For example: fare payment is an obligatory line of expenses. But if you ride a taxi – then it becomes your “pleasant waste”. Food seems to be another indispensable line. But if you prefer to eat in a cafe, buy fast food, you can’t refuse expensive desserts – this is another category of expenses.
Life hack #3. Shop wisely, leave emotions aside
There are a few rules that make it work out for you.
- Probably everyone knows about the first one. Do not go to the supermarket when you are hungry! Otherwise, your grocery basket will certainly contain all the tastiest and least useful products.
- Determine in advance how much money you can spend today. Agree with yourself that you will never go beyond this amount. The easiest option is to bring cash. But then the opportunity to use cashback or accumulate miles will be lost, so I am not a supporter of cash.
- Important: make a shopping list. Ideally, come up with an approximate menu for the whole week and write down products based on these plans. The list will help you not to buy anything extra.
- Buy in hypermarkets instead of near-home-stores. The prices differ. It seems to be a trifle, but if practice this every week, this change forms a cost of a good jacket at the end of the year.
Life hack #4. Don’t forget to make savings every month
The golden rule of accumulation sounds simple:“First save, thenspend.” According to an ideal budget allocation scheme (50-30-20), 20% of the income should go to savings/investments. You need to start with at least 10%. This is a required exercise! We got a salary – we immediately remove 10%. Then we distribute the remaining funds.
Some experts recommend making savings even in months of money shortage. Find a reliable lending company with a fair interest rate and make them your regular partners and helpers.
Life hack #5. Motivate yourself – it’s important!
You should not take control of finances if you are not morally ready. Things are much better if there is a Goal (yes, that’s right – with a capital letter). Everyone has their own – as soon as possible to pay the mortgage, go on vacation, buy a dream car or make repairs in the apartment. If you have difficulties of a psychological plan (“I can’t force myself”, “I’m such a squander”) – motivation is especially important. Set a task for yourself and go to it.
There is one more difficulty: sometimes you have to reach the Goal in too small steps, this also interferes with motivation. Example: you want your apartment, at least dream of a mortgage, but you can afford to save only £300 a month. A drop in the ocean! How long will I save? A hundred years? Who needs it, I’d better buy new shoes, they will please me today.” And that’s it – you have postponed your dream of housing for another month.In fact, a small step is still a step. Two or three years – and you can already think about a mortgage in the suburbs. And if the Goal is not so global, then things will go even faster.