For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails
Sign up to our free breaking news emails
More than half (59%) of households don’t have a budget they stick to each month, according to new research.
But, with a number of bills increasing from April, and many people already feeling the strain, could this be a good time to take a closer look at your costs and spending?
Having a budget in place can help you gain a sense of control over your finances – and over a quarter (27%) of people say rising costs have actually prompted them to start budgeting, the poll for wealth manager RBC Brewin Dolphin reveals.
Eighteen to 24-year-olds are the most likely age group to say rising costs have prompted them to budget, while those aged 65 or over were least likely, the survey of more than 2,300 people in February found.
When looking at what’s stopping people creating a budget, 14% say they don’t have the time, and one in 20 (5%) simply don’t know how.
However, it might not be as complex as some might believe.
“Having a budget is the foundation stone of planning your household finances,” says Carla Morris, financial planner at RBC Brewin Dolphin. “It gives you a month-to-month breakdown of your income and outgoings, making it easier to manage your money, identifying where savings could be made, and giving you a clear view of how much you should be able to contribute towards your long-term financial goals.
“It is worrying that so many households do not have one in place, particularly given the financial pressures many have been put under in the past few years.”
Here, Morris shares some top tips for getting on top of your budgeting…
1. Take it back to basics
Morris says: “Coming up with a budget can be as simple as looking through what goes into your bank account every month, and what goes out. Make a budget work for you.”
You can use software, or even just a notepad to write things down. “There is no right or wrong way to do it so long as you have the right information,” Morris adds.
2. Can you boost your income?
If you regularly have more money going out than coming in, this could soon lead to problems.
“If your budget is not in surplus, then it’s unsustainable,” says Morris. “If you want to increase your income and your job allows for extra paid hours, that could be one option. Alternatively, you could look at starting a small business or project, although this may require some money up front, or selling belongings through services like Vinted, Depop, or eBay.”
3. Can you cut your spending?
“Sometimes it’s just not possible to increase your income, so cutting spending is the only option,” Morris adds.
“Look through your direct debits – what are they for, and do you really need them? If you subscribe to multiple streaming services, cutting down to one may be a straightforward way of saving hundreds of pounds per year.”
4. But be careful what you cut
“If you are cancelling direct debits, keep in mind how they fit into your long-term goals. Insurance can be among the first things people look to cut, but don’t sacrifice a benefit that may pay off in future years for a relatively modest short-term gain,” Morris cautions. “Likewise, try to avoid cutting contributions to your pension, as small cuts now may make a big difference much further down the line.”
5. Prioritise expensive debt
Morris suggests checking the interest rates on debts and prioritising the highest interest ones when clearing them.
If you’re struggling, contact your lender to discuss the options and consider speaking to a debt help charity.
