Getting on Top of Your Finances

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The first step in saving money for the future is to get on top of your finances and give yourself a bit of control over the present. This can be done very simply – by spending a bit less than you bring in every month (including all of your outgoings) and then using the difference – the extra money you save – to start funding a savings account and other investments for the future. If you can do this throughout the majority of months in the year, then you will have taken your first steps on the road to being financially free.

However, for many people it might not be quite that simple as there may well be more involved in reducing expenditure – such as clearing debts for example – or it may be a case of having to find a way to boost income in order to be able to save a bit every month. This could be anything from making changes to outgoings, to cutting down on holidays or from taking an extra job or taking on a lodger. When it comes to saving for the future, most people will have to do two things – setting a strict budget or cutting back on spending.

Setting a Strict Budget

Everyone has tried at one time or another to set themselves a budget. It’s a very simple thing to do and the only tricky part is actually sticking to it! All you have to do is draw up a list of all of your outgoings (and especially your bills, direct debits and standing orders) and calculate your monthly expenditure. Included in this should be your food shopping, money spent on going out, cash withdrawals, subscriptions etc. On top of this you should also work out how much you spend per month / year on your car (insurance, repairs, breakdown cover etc) and on your house (repairs, insurance, maintenance etc.) You can do this with a basic spreadsheet app or if you want, invest in some home budgeting software. This will give you an initial picture of your outgoings. It is also worth taking a few weeks to monitor where you are spending your money every day. A basic outgoings diary which you fill in at the end of every day, will go a long way towards helping you work out where all your money is going – the odd coffee here, newspaper there can quickly add up!

Cutting Back on Spending

Once you have worked out how much you are spending it is time to work out how much of that spending is wasted spending. When doing this it is worth starting with cutting out the stuff that would involve very little sacrifice – the things that aren’t absolutely necessary in your life, like the two or three coffees from the coffee shop, or the extra magazine here and there. Then you can move onto the things that you don’t use that often and which are probably, if you are honest with yourself, a waste of money. For example, if you have a gym membership but hardly ever use it. Or if you joined the National Trust and never go and visit. We’ve all got these kinds of memberships and they are the easiest to cull when trying to save for the future. Indeed, most of these will net you hundreds of extra pounds a year without you even having to make changes!

Smarter Living

Lastly, a great deal of savings can be made just by concentrating on reducing any and all of your major bills that come in monthly. This can be done by phoning around companies you use and asking if you can renegotiate your bill or by going online and looking for alternate providers who might offer a better rate. Don’t be afraid to play them off against each other to get an even better rate still! This approach works well with the following types of company:

Utilities Companies

After rent or mortgage payments, utility bills will likely represent the bulk of people’s outgoings. They are also the easiest set of bills to make savings on, purely because there are a number of different providers out there all vying for your attention and because there are a multitude of apps and websites out there dedicated to switching regularly between providers in order to get the best deals and savings. These switcher sites cover everything from gas, electricity and water to broadband, mobile phone and tv channels so it is worth checking every bill you have going out.

Financial Companies

Again, all of the companies that handle your financial outgoings can be easily replaced or renegotiated. This includes your mortgage, house insurance, car insurance, current and savings account with your bank and of course your credit card. We will look at debts in another section, but credit cards represent one of the most expensive and also most unnecessary outgoings and they are easily switchable to new credit cards offering 0% interest for 6 months.

General Shopping

 Don’t forget to save money wherever you can. These days there are a ton of sites online dedicated to getting the best deals and the biggest savings on every aspect of our lives. Every penny you save on these equates to more savings for your retirement fund.

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