Budgeting is a great way to get back in control of your finances. Here are our 10 tips to improve your budget.
You may have already looked at building a budget, and now you’re ready to explore ways to further improve your budget even more. Below are our top tips to help you get the most out of your budget.
1. Set your targets
Setting financial goals can help remind you what you’re focusing on and why you’re budgeting in the first place. It will help you to stick with your budget and prevent you from falling into old routines.
Start by writing down the reason why you’re budgeting, whether this is to pay off your debts, cut overspending, get a mortgage, or save for retirement. Whatever your reason, you should clearly outline your goals and plan out realistically how long they will take to achieve. If you need help on creating goals that are achievable, our blog on goal setting might help.
2. Honest budgeting
When looking at your budget, be honest with yourself and explore all your possible options on what you could do without. Take a look at your spending and identify what is essential and what is not, this will give you a base to help you understand what you need to spend to maintain your lifestyle.
You might find that you’re paying out for subscriptions that you don’t need, or you could save some extra money by switching household bills or changing your phone contract. Even spending a little time to prep your lunch at home instead of buying a sandwich for the local shop can help in the long run.
Budgeting isn’t meant to be a chore. Yes, you may need to make some sacrifices to help you reach your financial goals, but that doesn’t mean you can’t enjoy little luxuries and celebrate each step you make to achieve what you want. There are lots of ways you can live frugally while on a budget, so get creative and enjoy the little things.
If you’re a Cabot customer, you can take advantage of our Budget Planner tool which can help take the hassle out of budgeting. Our tool can help you work out what you have left over after all your bills and expenses, and it can determine an affordable payment plan solution.
3. Make a schedule
Planning… You’ll hear this a lot when you make a budget, but it’s only because it works! A way to manage your expenses is to plan when you’re spending money, which you can do for both essential and non-essential purchases.
Having an idea of when your expenses are going out and how much to spend will help keep you on top of your budget. There’s lots of ways to minimize your spend in your daily life, that includes spending less on your weekly shop. Try planning when you’re doing your food shops and what exactly you need each day of the week. There are many free meal planning websites available too – in case you’re looking for that little bit of inspo!
4. Change is a part of life
The phrase ‘no two days are the same’ is true; stuff happens, and sometimes we need to adapt because of it. When you’re budgeting, think of your budget as a part of yourself, when things affect you, the good and the bad, you and your budget must change with it.
Experiences like a new job, increase or decrease in salary, or a new member to the family are all examples of things that could massively affect your life and your budget. As an example, raising a child from birth to an adult with a partner can cost an average of £24.44 per day. These lifechanging events could have an impact on what you can afford and where your money will be spent.
It's the reason why you should regularly reflect on your budget and make changes when you need to. If you’re a Cabot customer, we understand that circumstances change which can affect your affordability, which is why we promote regular reviews – our Budget Planner is useful for this, it’s quick and easy to use and you’ll be able to set up a manageable plan.
5. Plan for irregular expenses
Many of us have expenses that slip our mind because they only come up every once in a while, whether this is a MOT for your car, insurance, festivities, or even clothes. These can be easy to forget about, and when they creep up it can be an unwanted added expense.
When you look at your budget, make a list of irregular expenses that could affect your expenditure and try and schedule them in to make your budget work for you. Some bank accounts allow you to create savings pots, consider spreading the amount of these irregular expenses and saving them on a monthly basis, rather than spending a large amount at one time – think of it as your own personal subscription!
6. Expect the unexpected
Unexpected expenses happen, and not everyone has the luxury of having money behind them to make something like a boiler breakdown become more of an inconvenience than an emergency. But whatever your situation, when an unexpected expense happens, it’s important to be flexible with your budget to help you through the tight spot.
Use your budget to prioritise your spending and cut back on the non-essentials to try and make the best out of a difficult situation. It might mean you have to cut back on spending the following month or months to help you get back on track.
A good budget is a flexible budget. It will work with you to help you achieve the things you need and want.
7. Give yourself a buffer
It’s not possible for everyone, but if you can, try putting some money away. Even if it is just a little, having some back-up funds can help you manage irregular or emergency expenses.
Along with budgeting, saving is a habit. If you can get in a routine of putting some money away for emergencies, it can give you that extra bit of confidence in your day-to-day life.
If you’d like to kickstart your savings, try rounding up your expenses and put the extra pounds or pennies in a savings account. You’ll barely notice the difference in the expense, and it’ll help to grow your savings.
8. Track your progress
Reflecting on your budget is something you should do regularly, like once a month or every couple of months. Not only will it help you to keep track of how well you’re doing and if you need to amend any of your plans, but by seeing your strides to meeting your financial goals, it’ll help give you that extra bit of motivation to keep going.
If you’re a Cabot customer, using the Budget Planner tool is a great way to review your progress and keep on top of your costs.
9. Pay off your debts
A way to have more money for you is to pay off your debts. It will give you the opportunity to spend the money you would’ve spent on an expense on the things you love, whether it’s creating new memories or working towards your financial goals.
If you are a Cabot customer, we can work with you to find a solution that is right for you by setting up an affordable payment plan. A payment plan ensures you can repay your balance in a way that’s manageable. We will work with you to understand your financial situation so you’re on an affordable payment plan that’s suitable for you.
10. Don’t be afraid to seek advice
If you’re looking at your budget and you feel like you’re struggling, just remember there is help available. There are lots of free debt advice services who can help. StepChange and PayPlan are charities that specialise with debt issues, or Mind is an excellent mental health charity. If you’d like to find more general financial advice, you can also visit MoneyHelper for money and pension guidance.
We understand the road to financial recovery can be hard. If you’re a Cabot customer, contact us and let us know if your situation has changed. We are always happy to work with you to find the best solution for you.
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