The squeeze is on, especially with food, rent, transport and household services all rising significantly. And this comes as many of us have experienced cuts in salary or frozen wages.
So what’s a budgeter to do? If you don’t want to look for a new job because you're happy where you are, the only alternative is to budget harder. We show you how…
Work out your essential spend
We all have essential bills (pimping your car and buying shoes doesn’t count!). Those things we HAVE to spend on, splash most of our cash on, and really resent coming out of our bank accounts each month.
Essential outgoings include:
- Rent (the big one)
- Transport (almost as big as rent)
- Water, electricity and gas
- Extras e.g. Sky TV, Broadband, phone bill
- TV licence
- Home contents insurance/building insurance
- Other insurance (life, health, pet etc)
- Car fees (if applicable)
- Credit cards
- Loans and overdraft and transport costs
Work out exactly how much you spend on these must-pay bills and set that aside each month. This is the money you just can’t touch. If it’s looking high, shop around online to see if you’re getting the best deal. You can save hundreds of pounds a year, for example, just by switching energy providers. Or you could move your credit card debts across to an interest-free card. You get the idea… Be savvy about your essential payments and you could see the monthly amount drop.
Next, add your monthly food bill (minus extras like beer) to the total, add all this up and take it away from your net total monthly pay (your salary after tax). That’s what you’ve got to play with. As long as you always ensure that you have enough money to pay for the essentials then you’ll be OK. Bored maybe, but OK.
Life's little luxuries
None of us want to live to work – we all need time to relax and enjoy our time off. Although you don’t have to always spend money to enjoy yourself, it helps! Things like little treats, clothing and even trips to the pub soon add up. And that morning trip to Pret can cost £40+ in a month. As long as you’re realistic about it and don’t set aside too much money then you’ll be able to enjoy some of life’s little luxuries.
Rainy day fund
It’s easy at the moment to forget about saving; after all, who can put money aside when they can barely afford the weekly food shop? Fair enough, but if at all possible, put a little bit of money aside in savings. Whether it’s £5, £20 or £100+ a month, saving a little bit from each pay packet could really help you out if an emergency should crop up further down the line.
Now you know exactly where you stand with your finances, take a long, hard look at where you can make changes in your lifestyle to save money. Could you finally give up smoking? Do you REALLY need all the Sky Sports channels? And what about flying with Easyjet on your next holiday instead of Virgin Atlantic?
We don’t want to be Grinch-like about it, but by making small sacrifices, you could really save some money that could, in the long-term, make your life more enjoyable.