I’ll be brutally honest here, I was never good with budgeting in my younger days – which is why I ended up with a lot of debt as my parents never taught me about money. This of course changed when Khushi and I moved to the UK in, Summer of 2008. From living with my parents to being all on my own with a young child, in a new country, with no friends and family and barely any money.
It has been a rollercoaster of a journey, to say the least – and I had hit rock bottom – LITERALLY. But I knew I couldn’t go on like this and change had to happen, and so it did, slowly, but surely – and it’s only in the last 3.5 years that I finally reached the level of financial stability I once only had dreamt of. It was no doubt hard, and sacrifices had to be made, sometimes, I’d go hungry just so Khushi would have enough food. But all these experiences taught me so much; to be savvy and frugal, how to make the most of what I have available, differentiate between ‘WANTS’ and ‘NEEDS’ (this was a tricky one!) and more.
Living on a budget helped me to make more of my money long term; not only did I manage to get off benefits, but I also decreased my essential living costs by 50% and put aside money to save.
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If you like the sound of this, I hope the ideas below will help you to budget more effectively now and in the future + feel less stressed and worried.
Track your income and expenditure
Identify how much money you have coming in against how much you spend each month. Analyse where you could instantly save money.
- Could you reduce your phone and Internet tariffs? This is something I did last year, I decreased our monthly Internet and mobile phone bills from £80 to £30.
- Are you paying too much for insurance premiums? I used to pay £3.79 for my TV insurance, and then I received a letter that the monthly amount will increase to £4.89 a month – I cancelled my TV insurance. Truth to be told, if something happens to my TV, I am not fussed, I could happily live without it – and if I do fancy watching something, I’ve got my laptop and tablet.
- Do you utilise your monthly gym membership effectively?
You can easily resolve these questions by calling up your suppliers and asking them to recalculate your payment terms (this is what I did). Companies are often willing to reduce charges to retain customers and if they won’t, someone else can usually offer you a better deal if you have a sound credit rating.
“Instead of working so hard to make ends meet, work on having fewer ends.” ~ Courtney Carver
Deal with your debts
If you’ve got debts, don’t avoid paying them as this will cost you more in the long term and your financial situation could spiral out of control (I learnt this the hard way, so my mission last year was to pay off my credit card altogether).
Calculate how much you can afford each month to pay down your debts. You can even work out a debt payment scheme with your creditors, which can be a great help.
Set a limit for day-to-day living
Once you have assessed how much you need to cover monthly bills and outgoings, you should now be able to calculate a cost of living allowance. Try to keep in mind everything you need to pay for each month, including food shopping and petrol.
I’ve tried quite a few budgeting apps in the past, some of them were great, but then my bank started offering a budgeting feature in their banking app, so now I use them and I absolutely love it.
Plan for the future
If you have any spare cash, don’t spend it because you have it. Instead set up a monthly direct debit so any spare money goes into a high-interest account. Visit a financial comparison website to review the best deals currently available.
I’ve got a couple of accounts like this; one for my future Tiny House and one for my retirement (my pension savings account).
Life can sometimes take an unexpected turn. Your car could break down or a pipe in your home might burst. Even if you’ve little savings, effective budgeting will help ease the pressure if the going gets tough.