Manage your money

This is your vital first step – essentially a detailed list of your income and everything you spend.

You may wonder why knowing where your money goes will help get things under control, but it’s really important. Once you can see what’s going where, you can start doing something about it. And that could mean you can start paying off debts or saving up for something you need, like a holiday or a car.

1.  Start by making a list of everything you earn

Include wages, benefits and pensions. Convert everything into what you get per calendar month.

2.  Make a list of everything you spend

It’s important to include everything, including small everyday purchases like snacks, as well as occasional things like birthday presents.

First list the big outgoings. Include payments that only happen every year or few months, like the car’s service (convert them into monthly amounts). Then add the smaller items, like travel and leisure.

If you struggle to know how much you spend on other things through the month, look at your bank statement. You can also record all your spending through a month, and use that as a guide.

 3.  Use a budget planner

A great way of making a budget is to use a budget planner. Here’s one from the independent Money Advice Service. https://www.moneyadviceservice.org.uk/en/tools/budget-planner

If you spend more than you earn, you need to do something about it. Here are some ideas.

1.  Highlight all your optional spending

Make a list of all those things that you don’t absolutely need to pay for. This could include things like gym membership, buying lunch from a café or buying a morning coffee.

Work out alternatives, for example going for a run or doing exercise at home, making a packed lunch or taking your own coffee in a travel mug. Saving just £2 on coffee for every day you go to work could add up to £500 a year.

2.  Cut your household bills 

It’s surprisingly easy to save hundreds of pounds a year on reducing your bills. For example:

• Get a cheaper mobile phone contract.
• Find a cheaper gas or electricity deal – there are services that find you the best option.
• Find the cheapest fuel station near you.

See the Money Advice Service’s guide to saving money on household bills. https://www.moneyadviceservice.org.uk/en/articles/how-to-save-money-on-household-bills

3.  Use Cash

Having a fixed amount of cash to spend over a week, or when you go on a shopping trip, is a great way to control your spending. As you see the notes leaving your purse or wallet, you get a very clear idea of how much you’re spending – and that helps you decide whether you really want to make the purchase

4.  Get the whole family involved

Make a plan with everyone in the family, so everyone can do their bit. If you have children, you may well find that you can find cheaper ways to buy things for them, for example by getting a cheaper mobile phone deal.

The trouble with debt is that you pay interest on it, and that’s spending that you get nothing out of.

Start by paying off the debt that charges you the highest interest. Store cards typically charge the highest interest of all, followed by credit cards.

However, you must make sure you’re following the terms of your agreements and paying what you’re meant to pay when you’re meant to pay it.

Take a look at the Money Advice Service’s list of debt advice services. https://www.moneyadviceservice.org.uk/en/tools/debt-advice-locator

If you’re falling behind on payments for the really important things, like your rent or mortgage, energy bills, council tax, any fines or child support, then it’s time to get some help.

There are many advice services available across the UK, including local groups and organisations.

Take a look at the Money Advice Service’s list of debt advice services. https://www.moneyadviceservice.org.uk/en/tools/debt-advice-locator

It’s difficult to save if you only ever wait until there’s some spare money to put aside. The best idea is to save a little every month into a savings account. Even £10 a month adds up.

1. First, aim for an emergency fund – ideally enough to cover 3 months’ expenditure.
2. Then set a savings goal – for example saving up for a holiday. Then you won’t risk going into debt.