Sometimes, it’s easy for our finances to get the better of us. Even if you felt like you were doing well with your expenses for years, all it takes is one bad month to send your entire spending strategy veering off track. For a lot of consumers, that month is likely to happen in December, when festive spirits are high, and indulgence is everywhere.
The good news is that you don’t necessarily need to start the new year dealing with debt. A solid strategy could help you to turn your finances around in 2020, so you can begin to make the most out of every penny you earn.
The first step in changing your financial strategy is figuring out what you want to accomplish. Having a clear goal in mind for your finances is essential, because it helps you to figure out what you’re working towards, and what you’re going to need to reach your target. You might want to become a homeowner or get out of debt. You may even want to start your own business.
Once you have a long-term goal in mind, start working backwards to figure out what you’ll need to do to get to wherever you want to be. Remember, it’s a good idea to have milestones along the way to your goal so you can celebrate your accomplishments once in a while.
Budgeting is far from most people’s favourite thing, but it’s an important part of turning your finances around. Ultimately, you’re only going to be able to properly manage your expenses if you know how much money you have coming into and out of your household each month. Start with a barebones budget – this is the way that you find out exactly how much cash you have to spend each month.
Your bare-bones budget will include things like your mortgage and rent bills, your council tax, and other common expenses. After that, you can start to think about how much you can afford to spend on things like savings, entertainment, and long-term goals.
Part of having a successful spending strategy is figuring out where you can cut costs. Some people might be able to save money by switching their car insurance provider, for instance. Other people will need to spend less on their food shopping. However, whatever you need to change, it all starts with being more active and engaged in your spending habits. Rather than just buying the same items at the supermarket every week, or randomly spending money because it seems like a good idea at the time, think each purchase through.
Ask yourself whether you need to borrow money so you can get a kitchen right now, or whether you can afford to wait a few years while you save. Think about whether it’s better to spend £100 on a coat today so you can avoid buying a new one in a couple of months.
Another great way to get more control over your spending habits is to jump into your spending information and look for ways that you can cut costs. Once you have your budget telling you where your money is coming and going each month, you can look for evidence that you might be spending more than necessary in certain areas. For instance, you might discover that you’re still paying for a gym subscription that you no longer use.
As well as getting rid of things you don’t use, remember to get rid of anything that you’re spending over-the-odds for too. For instance, if you’re still with the same electricity and gas supplier that you’ve had for the last five years, now might be the time to look for another deal.
Finally, if no matter what you do, it feels like you can’t make ends meet, then you might need to think about ways that you can make a little extra cash. Look into selling some of the items around your home that you no longer need or consider taking on a second job in your spare time. There are plenty of digital job opportunities available today that are excellent for people who work a traditional job through the day but need to make a little more cash on an evening.
List out some of the skills that you’d like to put to work in a side gig and see what you can do with your talents.
**This post is a collaboration and I have been compensated for my time. All thoughts and opinions are my own **