Do you know exactly where all of your money goes each month? Do you know how much money you have left to spend this month? Are you saving towards an emergency fund?
If you answered ‘No’ to any of these it may be time to take control of your finances.
The first step to saving more efficiently is to keep track of what you spend and budget. There are many different ways to do this. The key to saving more successfully is to find a system that works for you and to stick with it.
Step One: Keep Track of What you Spend
We pay for the items we need in many different ways – we spend cash, credit, debit, and direct debit. With all of this going on it’s important to have a system in place to understand where you’re up to.
Luckily, there are digital tools to help you keep track of your spending, look for free tools that will group all your spending in one place. Or alternatively you can keep a log on good old reliable paper.
Take a look at a couple months of spending. Total up everything you spend and divide it into large categories – housing (rent/mortgage payments), food, utility bills, entertainment, shopping, savings, and everything else.
Step Two: Create Your Budget
Now you know where your money is actually going. But is it going where it should? Are there any surprises? Are you spending more in one area than you’d like?
Create a budget that you can stick to. Look at places you can cut back in order to pay off any high-interest debt and so you can start to save.
Step Three: Stick to your Budget
Putting together a budget is pretty easy: the harder part is sticking to it! The key to this is to go back to step one and keep track of your spending. Each week, check your finances to make sure you are staying within your budget.
Whether you do this through an app, with a spreadsheet or by writing down what you spend, no matter how you do it, it’s important to find a system that works for you and stick to it.
Good luck and let us know what works best for you.