Reduce Spending Without Going Crazy
According to the Office for National Statics, household spending in the UK has increased by 0.8%. This means that if you are like most consumers; your spending habits have taken an upward trend over the past few years. This is not good news if you haven’t been saving. But how do you reduce your spending without going crazy?
If you want to save money, you have to spend less than you make every month. It’s simple math. Many people believe that they don’t have any extra money to cut from their spending plan, but in most cases this simply isn’t true. If you want to save for retirement, vacation or a rainy day you and you don’t have the time, energy or desire to take on extra work, you’ll need to cut back on your expenses.
Below are a few tips from lowincomeloansassistance.co.uk on ways to find extra money in your budget:
Create a Budget
If you don’t have a budget written down, you are probably losing money. You have to have a written budget and you need to use your budget religiously. You do not need to invest in a fancy computer program if you can’t afford it, or don’t know how to use them. You can use an excel program or even a regular notebook and pen. You’ll also find ready-made budget sheets online that feature categories with blank spaces for you to fill in with how much you have for each category.
A budget will allow you to set aside some money to spend on fun things. You can save money without giving up all of your favourite things; a budget simply helps you become more disciplined about your spending so you have enough money left over to save for things you really want or need.
Track your Spending
One of the best ways to discover where your funds are going is to keep track of every purchase. A great test is to track every penny you spend. Print off your bank statement, keep receipts etc. Create a simple form with different categories across the top: Entertainment (include eating out, television expenses, alcohol purchases, snack foods, coffee runs etc.) Necessities (this should include rent, utilities, gas for your car and groceries), Bills (include any debts, insurance, etc.) and Miscellaneous (clothing, household expenses). As you go through your receipts and bank statements put each transaction into a category. Once you have all of your transactions written down, total the amount and look at where the bulk of your money is going.
When you start reducing spending, start with your entertainment expenses.
Shop Smarter
Even if you can’t make big cuts in your current spending, you can still save money by shopping smarter. Stop paying full price for everything and stop buying name brands. In most cases you can get the same product for less by simply purchasing a different brand. This is particularly helpful at the grocery shop. Most off brand food tastes just the same as the name brand items. If you have a particular palate, be selective about what name brands you purchase and buy off brand everything else.
When you purchase clothing, buy items online or from a consignment shop. You can find great clothes for a fraction of the price when you purchase second hand. In fact, you can purchase most household furniture items second hand for much less than buying new.
Pay Yourself First
One simple way to ensure that you have enough money to save is to pay yourself first. Look at programs to help you save like using New Individual Savings Accounts (NISA’s). These tax efficient accounts can assist you with investing or saving for your future. You can save up to £15,000 per year this way. You can also take 10 percent of your pay and put it into a separate account. Over time what seems like a little sacrifice will grow into a healthy savings. You are your biggest asset, saving will protect you from financial problems in the future. So now is the time to reduce your spending and start saving today!
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Category: Financial Planning
