Money management is a skill we always need to master. Whether saving for a holiday, big purchase, investment or rainy day, knowing how to stretch your income and get the most bang for your buck is an essential skill. Here are 10 practical tips to help you control your spending and budget effectively.
1. Know where your money goes
First, you must know where your money goes. This sounds simple enough but how often do we sit down to look into our spending habits? Analyse your bank statements for the past 3 months and note trends. Are you spending large amounts on non-essentials? Ordering one too many takeouts? Once you have a clear picture, categorise your spending into essential and non-essential, then decide which of the non-essential items if any are on rotation and can afford to go.
2. Create weekly spending pots
Allocate a weekly budget for the month and base your spending around this. Monzo is the perfect app for this. You can create a pot each week for your allowance and make purchases from this. Make this a routine. Choose a day when you top up your allowance (e.g. Sunday) and routinely make transfers from your main bank account to your Monzo account on your chosen day.
This money management strategy can be useful as not only do you get alerts (via the app) whenever you spend, but you also develop more cautious spending habits during the week as you want to make your allowance last until refresh day.
To take this one step further, you could even divide your weekly budget into subcategories (e.g. groceries, entertainment, transport) and set a spending limit for each.
3. Utilise Sales
Now this one calls for some pre-planning. Often we find ourselves pinching the pennies when it comes to celebrations and all of the spending that comes with the holiday seasons so to combat this requires some forward thinking. The following are key dates for sales in the UK that can help your cash go the extra mile:
- Boxing Day sales (December 26) – These sales start straight after Christmas and continue early into January. This is a good time to get Christmas items for next year as they are heavily discounted to clear stock quickly. Many items like Christmas crackers, decorations and even gift items can be brought and stored away until next year.
- January sales – If you missed the boxing day rush, worry not because the sales are extended during January. This is a particularly good time to buy clothing items as these are typically on sale for shops to clear stock in preparation for new season garments. If you have any birthdays coming up and you know some items your giftee has been desperately wanting, now would be the time to shop.
- Easter Sales (March/April) – Sales during this period usually focus on chocolates, gifts and household items.
- Summer sales ( June- August) – If you have any plans to renovate or redecorate your garden, this would be a good time to buy garden furniture at lower prices. As retail shops start preparing for chillier months, summer clothing is reduced and many fashion retailers lower prices on summer wear to make way for autumn/winter stock. If you have a holiday coming up (particularly one to a warm destination), this would be a good time to buy holiday items – especially swimwear.
- Black Friday and Cyber Monday (Late November) – These are some of the biggest sales events during the year and as such it gets pretty busy on the streets. With sales in almost every category area, it is advisable to set your alarm and shop online early to avoid disappointment (especially when it comes to fashion items).
4. Know your discount codes
Many employers offer schemes that provide special discounts for examples – discounts for key workers such as nurses, doctors or teachers. Click here to find out more.
5. Utilise loyalty programs
Sign up for loyalty programs. The food shop in particular can get costly so where you have the option to save via a loyalty program, make use of this. Places like Tesco (if you live in the UK) offer some of the best grocery savings.
By implementing these strategies, you’ll find it easier to stay within your budget and start making investments while still enjoying the fun things in life. Start small, stay consistent, and watch your savings grow!
What’s your favorite budgeting tip? Share in the comments below.
