How to Balance Spending and Saving

Struggling to juggle essential bills, spending on treats and still put a bit away for rainy days or holidays? Guest contributor Chrissie shares tips from financial experts on how to make a money management plan to balance spending and saving.

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Receiving your first paycheque is exciting, but it can also be overwhelming. As tempting as it is to hit ‘add to basket’ on everything in your wishlists, the reality is that a large portion of your monthly income needs to be spent on rent, bills and food.

Research suggests almost 4/5 of students worry about making ends meet, yet 18% admit to having never budgeted.

Having a money management plan is an effective way to calculate how much you have spare once the essentials have been paid. But how do you go about this, and what should you consider when deciding how much to spend on today’s treats or save for the future?

Budgeting 101

Learning how to budget starts with assessing your monthly income and identifying your most important expenses. Factoring these into a financial plan will help you monitor your outgoings and set realistic long-term goals.
Claire Roach, money-saving blogger and owner of Daily Deals UK, said:  ‘Ensure you pay your bills and make any essential purchases the day you get paid so you don’t have lots of cash in your bank account to tempt you into non-essential spending.’

Transitioning from university life into the world of work can come as a shock, especially when it comes to managing money. Research by NatWest found that 23% of students don’t use any budgeting methods, while 4% don’t consider what they’re spending at all.

But knowing where your money is going is not only good practice for future saving, it’s also incredibility important if you’re self-employed, freelance or rely on tips, as a fluctuating income can make it difficult to budget.
A plan can be anything from a notebook, a spreadsheet, or a specific app—anything that helps you stay on top of your finances. Make contractual obligations such as utilities a priority, followed by additional monthly payments such as subscription services or memberships.
Caroline Domanska, income strategist and founder of Money Mindset Coach, said: ‘Look at all the things that are important to you in the short, medium and long term and allocate some money to each. Put some money in a different bank account that’s harder for you to access.’
If you live in a house or flat-share, it may be easier to set up a joint account which everyone can pay into and keep track of. That way, the responsibility for organising payments is not on a single account holder. But you should only enter a joint account with people you trust will pay on time. Ashley Tate, chief executive officer at online student bill-sharing tool Split The Bills, said: ‘If you share a joint account with someone who has bad credit, makes late payments or if the account goes overdrawn, it could impact your credit score. This could stop you from getting a mortgage or even a mobile phone contract in the future.’

Fending off bad habits

Saving some of your income each month instead of splurging will stand you in good stead if you decide to buy a house, get married or invest in the future. But don’t deprive yourself of the things you like and enjoy.
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Dennis Harhalakis, founder of Cambridge Money Coaching, said: ‘A good guide is to allocate 50% to needs, 30% to wants and 20% to saving. Automate the savings process and only spend what’s left over. If you want to control your spending, set a weekly allowance, take it out in cash and leave the cards at home.’

Making a financial plan can also make it obvious where the occasional treat becomes a recurring expense—a coffee or lunch out every so often may be harmless but can add up to a large chunk of your monthly budget if not done in moderation. Ashley said: ‘Seeing your spending habits written down can be a wake-up call. If your budget amount outweighs your income, something needs to go. Be honest with yourself about what you can actually afford and what you can live without.’

In a time when so many of us use social media, it seems like spending triggers are everywhere. Just by opening your Instagram or Facebook feed, you’ll be met by multiple sponsored advertisements and aspirational posts encouraging you to buy products or experiences you don’t need. Caroline said: ‘We often have a false impression of how others live their life. We can assume they have the money to pay for what we see, but it’s not always the case. Education is needed about living life in your own lane and learning what makes you—not someone else—feel first class. Choose to spend your money in a way that feels good to you.’

As tempting as it may be it to impulse buy, you have to bear in mind what is best for you and your finances. It might be frustrating or disappointing not being able to indulge in the latest trends, but by sticking to a reasonable budget tailored to you, you can avoid financial mishaps in the future.

Chrissie Wood, contributor

About Chrissie Wood

Chrissie 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.



Find out more about budgeting:

Manage Your Finances
Good planning now can prevent money worries later. See HelloGrads first steps to managing your finances, from budgeting to graduate bank accounts

How to Plan Your Budget
Tools & guidelines for planning a budget