Five Ways to get Your Finances Back on Track
Guest contributor Chrissie, offers some sound tips on how to get your finances back on track when times are tough, or you have simply overspent.
We’ve all been in the situation where we’ve spent a bit too much, whether that’s on boozy nights out, takeaways for nights in, or a whole new wardrobe. Or maybe times are tough and we just need to cut back. Checking your bank balance after spending on impulse can be extremely anxiety-inducing. But this doesn’t mean you can’t replenish your bank account and get your finances back on track. Read our five tips on how to manage your money responsibly and make extra cash.
1. Control your costs
Before you can cut costs and make savings, you’ll need to know exactly how much you earn and identify your habitual expenses.
To begin, track your essential payments such as rent, utilities, petrol and supermarket shops. Then jot down any other regular spending habits which appear in your bank statement. This may include Spotify subscriptions, coffee, cinema tickets and fitness memberships.
Dennis Harhalakis, founder of Cambridge Money Coaching adds: “Getting on top of your finances requires an investment of time and this time needs to be scheduled. Willpower is not enough. Make some time and stick to it.”
Then subtract these costs from your monthly income to find out how much you should have left at the end of the working month or if you have enough to cover all planned payments. If you don’t or would like a bit more leftover, consider whether any payments could be removed or reduced. For example, if you have a gym membership that you never use, cancel it or if you spend a lot of money on buying lunches, make sandwiches at home instead.
If you’re likely to whip out your debit card spontaneously to buy things you don’t need, leave it at home and withdraw your weekly budget in cash.
2. Organise your utility bills
Budgeting may highlight that your utilities cost more than you realised. If your housemate or partner took on the responsibility of sorting bills, it’s easy to become oblivious to the exact cost of each bill and of any price increases. Check comparison sites to see if you can get better deals on utilities and household bills.
Creating a joint account ensures everyone can remain aware of utility payments. However, if anyone already has a bad credit score, the account goes overdrawn or if payments are made late, everybody could end up with poor credit.
Ashley Tate, chief executive officer at online student bill-sharing tool Split The Bills adds: “Each person could take on the responsibility for certain utilities, but this can often be too complicated and cause trouble if somebody doesn’t pay their dedicated bill on time.” A bill-splitting service can simplify the budgeting process by assembling all utility payments into one monthly fee per person, so everybody is aware of the exact amount they owe. It also eliminates the risk of late payments and bad credit.
3. Sell any unwanted items
Selling anything that you no longer need or want on second-hand shopping apps and websites such as eBay and Depop are great ways to make some extra cash and boost your finances.
Sort through your wardrobe, storage boxes and look under the bed – you might be surprised at how many items you have accumulated over the years that go unused.
4. Find creative ways to save
Once you know whether you’re able to save and how much, decide what your saving goals are. For example, do you want to save for a house deposit, a holiday or a car? Knowing what you’re aiming for can make it easier to stay motivated.
Then work out how long it will take you to reach the total amount. If you’re likely to forget to save, set up an automatic transfer of a fixed amount from your current account to a savings account.
But if you can’t afford a set amount each month, try more inventive methods to find extra savings. Ashley says: “Begin by going back to the basics. Get a piggy bank and put in any spare change you have. If you generally don’t carry physical money, use an app that rounds up every purchase to the nearest pound and invests the difference into an online savings pot.”
MoneySavingExpert’s ‘1p Savings Challenge’ could help you save money over a year without noticing it. This involves saving one penny on the first day, then on each subsequent day, you save what you saved the day before, plus a penny more; so on the last day of the year, you put away £3.65, bringing your total year’s savings to almost £670. Find out more here.
5. Increase your income
If your salary or student loan isn’t quite enough to cover your living costs, you may need to try and change your financial situation.
In this current economic climate, it may not be possible to negotiate a pay rise if you’re working, but you might need to start thinking about finding other job opportunities with a higher salary.
If you’re a student, a part-time job could help flourish your bank account. If you already have one, ask to pick up some extra shifts.
You may also be able to set up a freelance business to fulfil in your spare time if you have a profitable skill such as graphic design, coding, sewing, book-keeping or writing. There are plenty of online sites where you could sign up and start building some income and experience, for example Upwork, PeoplePerHour and Guru.
Being in a cash poor situation can be daunting. But setting realistic goals, eliminating unhealthy spending behaviour and forming a budget plan will help you keep on top of your money.
Find out more about budgeting:
Manage Your Finances
Good planning now can prevent money worries later. Follow these first steps to managing your finances, from budgeting to graduate bank accounts
How to Plan Your Budget
Tools & guidelines for planning a budget
About the Author
Chrissie Wood is a features editor with a background in journalism.
After two years working as a reporter in a Manchester-based news agency, writing news stories and human interest features for a variety of national newspapers and women’s magazines, Chrissie relocated to Sheffield to begin a freelance writing career. She spent this time broadening her skills by working with local newspapers and writing digital content for multiple e-commerce websites. She eventually switched from journalism to digital content writing full-time and is currently enjoying working as a features editor in one of Sheffield’s top marketing agencies.