Masters of Budgeting: How to Manage Your Finances Like a Pro

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Money is one of the most stressful items we could ever carry around us. We work hard for it, then we spend it, we might gamble it away, and some people would even kill for it! Regardless of how you make yours, it’s never too late to start saving money so that we can reduce our stress and start managing our finances properly.

 

Why Should I Bother Managing My Finances?

 

If you’re asking this question then you probably haven’t been in debt yet or encountered a financial crisis or situation. You’re either naturally good at managing your finances, incredibly lucky, or you have someone to do it for you. Whatever the reason for it is, you should definitely start to understand how your finances work and how to plan ahead for bad situations. Desperate money matters can creep up and affect us at the worst times and no one wants to be heavy in debt at the same time they need to replace their car or pay for a specialised medical treatment.

 

By learning to manage your finances, you’re less likely to get pulled into debt or be surprised by sudden fees and expenses. You’ll also have a good credit rating which means you have a better chance of getting mortgages and loans in the future. Money experts have a keen eye on how to find great deals and where to make savings, so you’ll constantly be saving pennies and making the most out of your paycheck. You’ll always have extra money to spend on new gadgets, electronics, gifts and even holidays!

 

I’m Convinced! How Do I Get Started?

 

The key to starting your new money management adventure is to first gather your bills. You’ll need to write down the amount you’ve paid for utilities such as electricity, water or gas. Check how much you pay for your phone bill, the internet and also your cable TV. Include any weekly or monthly subscription services as well such as Netflix, and make sure you also consider the cost of taxes, your car and rent.

 

It’s a lot to write down and it’s recommended you use an online service or digital document instead of pen and paper. Make sure you take a couple of hours and come back to it in case you forget some things. Weekly costs like groceries might vary between each week, so average it out and add a bit of money onto it to count for some variance. For example, if you spend on average $80 a week for groceries, then add on an extra 25% which will bump it up to $100. This will cover costs such as extra food if you have guests around, treating yourself to a takeout meal, or going to a restaurant with friends. Electricity costs and phone bills might also vary a bit, so make sure you take heavy usage into account when adding up costs and bills.

 

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Don’t Forget Your Savings!

 

Something that people neglect to add to their weekly budget is their savings. It’s always a good idea to reserve a bit of money every time you get your paycheck. It could be just $100 or maybe all of the money you have left over. Either way, don’t neglect the importance of having a stash of money for emergency situations. You can accumulate a surprising amount of money by willing yourself to set up a savings account or piggy bank to store money.

 

Big Budgeting Guide: How to Get Started

 

So you’ve written down your weekly or monthly expenses, you’ve calculated extra costs and you’ve reserved a bit for your savings—now what? It’s time to wipe away the stress and start saving money.

 

The first thing to check is: are you in the negative? If you’re consistently spending more money than you can afford each paycheck then you’re doing something wrong. You have to cut down on spending costs immediately so that you don’t get into debt. More on how to save money later, but for now let’s focus on reading your budget.

 

If you’re in the positive then excellent! You’re already doing a great job with managing your finances. However, just because you’re a couple of dollars in the green that doesn’t mean you’re doing the best job you could. There’s always ways to save extra dollars so that you have extra spending money each week for your leisure.

 

Now that you’ve taken control of your finances, set up financing software or spreadsheets on your computer and make sure you record as much of your expenditure as possible. This is crucial because it will help you identify where you are saving money and where you could be doing better. Save all the receipts you get from the shops and make punch in all your expenses and the reasons for it. There are hundreds of spreadsheet templates for managing your finances that you can find online and many of them are free of charge!

 

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Let Your Family Know

 

One of the most important things to do before you embark on your money-saving journey is to let your family know. If they’re accustomed to going to the cinema every week and having an expensive meal at a restaurant afterwards, then you might need to tell them the bad news and cut it down to a monthly trip or every two weeks instead. They probably won’t be happy about it, but if you are providing for the family then you mustn’t lie to them about your financial situation because in a worst case scenario, you won’t even have a home for them to live in!

 

You can get help from your family by asking them to contribute. For example, eating less takeout food and buying fewer sweets, and exchanging it for healthier and cheaper snacks. You could also take your family out to cheaper holidays or days out that don’t involve spending lots of money, such as a trip to the beach or a relaxing picnic in the park.

 

Cut the Loans

 

If you’re already repaying a loan, then make sure you don’t get pulled into paying for another. Debt can be a nasty thing, and your finances depend on good credit rating and being able to pay off all of your outstanding costs. If you spend even a week with a negative bank balance, it could seriously harm your chances of borrowing money in the future or being accepted for a new mortgage. Pay off loans and then stop taking out future loans until you’re financially stable or unless it’s absolutely necessary.

 

One of the most helpful ways to save money on your mortgage is to actually refinance your house. You essentially pay off a loan with another loan, but most of the time you’ll get a lower interest rate or you can shorten the term of your mortgage. This is great for saving money in the long run, but it’ll take a lot of calculations and considerations to determine the real benefits.

 

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Time to Start Saving!

 

It’s time to start putting your plan into action. Start slowly by cutting luxuries and small costs. This includes buying cheaper versions of food but could also mean buying things that are worth more. For example, you could buy a pack of chicken breasts for $5, but there might be a pack that costs $10 which offers over twice the amount of chicken meat. Always look at how much you’re getting for your dollar, and always scout out for good deals on the internet and in different stores.

 

Buying in bulk can become a trap which is easy to fall into. Make sure when you buy in bulk that you can actually consume all the food before it goes bad. Clear out your freezer and make space for your large purchases and always remember to actually eat the food instead of constantly buying bulk items to store in your freezer. Large packs of toilet paper, tissues, and multi-buy cosmetics and toiletries are also good ways to save money. Toilet paper can often get expensive when you buy it in small packs, so buying a large bulk pack will save you money in the long-term.

 

Speaking of value, there are great ways to save money on leisure time with your family. For example, instead of taking regular trips to the cinema and spending money on tickets, food, drink and travel, consider getting movie subscription from Netflix or Amazon Prime and stay at home instead. For a modest cost every month or year you can get access to thousands of movies and shows without having to step outside of your door. You can combine it with a home cooked meal, some store-bought popcorn and a drink of your choice. You can even invite friends and family over!

 

Hopefully, this guide has taught you some of the basics of budgeting and living within your income. It’s never too late to practice some frugal money-saving tips and while you don’t need to completely cut your luxuries, it’s always a good idea to cut back on expenses to save money for a rainy day.

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