The start of a new year is a great time to take a look at your finances and create a plan for you to have a strong financial year.
We recommend starting this process by setting yourself a budget. Then you can truly see where your money goes and what changes you could make that will put yourself in the best position.
The first step to doing this is to know precisely how much money you have coming in after tax and workplace pension deductions. You may also have student loan repayments and other outgoings from your wage packet before it hits your bank. This value will give you your starting point and this is the absolute maximum you spend each month, in order to remain debt-free.
The next step is to total your fixed expenditures. These will be your housing costs, such a mortgage/rent, council tax, utilities, car payments, insurances, fuel costs, groceries and any direct debits that you have set up. These bills are fixed and it is vital that you (mentally) set aside the money for them.
From the remaining amount of money, you will have two pots; Save and Spend.
Saving comes first and should be sorted on the day that you are paid. Setting up a standing order to send money to a savings pots will mean that you are increasing your financial security for the future and giving yourself a set amount for discretionary spending each month.
For example, if you are paid £1,500 a month and all of your expenditures come to £1,000, the remaining £500 could be split into £100 of savings and £400 of spending each month.
If you are someone who knows they need to get a tighter grip on their spending, budgeting is a very good way to see where you might be wasting money, and possibilities of where you could save and make yourself more financially secure.
