Is it Always Important to Budget?

There are many finance experts that are always saying that we should budget. It can seem rather boring though and so is it as important as they make out and does it have to be done all of the time?

Budgeting is really important when you are tight for money. If you almost spend everything that you earn each month, then it is really important to make sure that you budget carefully so that you do not accidently overspend. You also need to make sure that, even if you are in control, you need to make sure that if things change a bit, you do not suddenly find that you are out of control with things. If you spend more than you earn then it is even more important that you budget to make sure that this does not happen all of the time.

Keeping a strict record of your finances is a good exercise to do to start with. Note down the money you have coming in to the household and the money the regularly goes out. Include larger payments that do not go out regularly as well as you will have a good idea of your current situation. You can use bank statements to help you with this and although you will not know exactly where all money was spent; particularly things bought with cash, you will still have a rough idea. This will help you to start to get an understanding of how you manage money month to month and will explain why you either have savings or why you struggle each month.

Whether you are struggling or not, it is a wise thing to do because it will allow you to understand where you stand with regards to your finances. If you have any goals, perhaps with regards to repaying debts or saving up money, you will be able to see where you currently are and what you need to do in order to achieve your goals. It need not take that long either, it does not have to be completely accurate, just a rough guide, particularly if you are managing well. If you are struggling then every penny may count.

Setting a budget can feel very restricting. You may feel that it means that there will be no fun and that you will only be able to spend money on necessities but that is not what it is about at all. It is about making sure that you are spending money on things that are important to you, Being more aware of where your money is going and making sure that you prioritise your spending so that you can reach your goals will actually be very helpful and does not mean there will be nothing left for treats, if you want some left, you can just budget it in. However, if you set a treat budget each month, it means that you will be more in control and less likely to spend more money than you can afford to. You can always carry some over to the next month if you want something more expensive.

Having a budget is a great way to feel in control of your finances. Knowing where all of your income is going can be extremely useful and you will easily know whether you can afford to buy certain things or whether you will need to wait until you next get paid or until you have saved up. It can be really easy to overspend whenever we are shopping as there are so many tempting things to choose from in the shops that keeping to a budget can help us to avoid buying too many things that we do not need. It can be extremely useful to help you to manage your spending, particularly if you find this difficult. You will also become more aware of how much things cost and it may mean that you will reduce your spending by choosing cheaper alternatives just because you are suddenly aware of how much certain things are. You may choose to try cheaper brands or cheaper shops and find that you can save a significant amount of money without even really trying.

Whether you have a large or small income, are spending lots of money or just a little and whether you are struggling to make ends meet or finding it easy, budgeting can be really important. You will be able to make sure that you are in control of your spending, saving and borrowing and know exactly where the money is all going.


Tips on Making Sure you do not Overspend

It can be really easy to spend more money than we have these days. This is because it is so easy to borrow money, especially with lenders like in the market and there are so many things available to spend money on. It used to be that only food, electricity and basic clothing and homewares were necessary to buy, but these days there are so many things which we like to have in order to make our lives fun that we spend lots of money on entertainment, luxury foods, clothing and accessories, travel and holidays, electronics and making our homes luxurious. This means that spending is so much higher and it can be much harder not to overspend.

Often we can overspend without really realising it. We buy a few things and then suddenly we do not have enough money left to cover the essentials or we find that we are overdrawn. It is so easy to get into debt, particularly with an overdraft or credit card, but it is wise to make sure that you do not do this. This is because it can be very expensive.

It is wise to keep a constant check on your bank balance. This will ensure that you know what money you have left and it can help you to manage your spending. However, you also need to be aware of what bills are due to go out and when so that you leave enough money to cover them. It can be easier to set them up so that they all go out just after you are paid so you can then easily see how much money is left. You will also need to know how much you spend on other things such as travel and food and whether there are any other purchases you are likely to need to make until you are next paid. If you are not sure, then looking back over previous bank statements should help you.

Having some money in reserve is always a good idea as well. This means that if you do spend more than you have, then you have some money to use, rather than having to borrow. If you can just try to put away a little bit each month, then you could start to build up a fund which will help you when you most need it.

You may wonder how you can possibly manage not to overspend let alone to save some money if you struggle each month. However, it should be possible if you are careful. It can be particularly hard if you do not have a regular income, perhaps due to being self-employed or on a zero hours contract, but you will still be able to have a go. Make yourself aware of all of the money that you need each month and this will help you to know what you will need to earn in order to cover those basics. You can then see whether you can find extra work or try something different to get some extra money. You might be able to earn more by doing some freelance work, some temping or contracting or earning money online. You could also see whether you can lower your bills by switching suppliers, changing to cheaper brands or downsizing to a smaller home that is cheaper to run.

It is wise to also think about your debit and credit cards. Sometimes spending on these can make it more difficult to budget. It is easy to use them to buy things and not think about how much it is. This can lead to you going overdrawn or for you to have a high credit card bill which you cannot pay back easily. If you do not a credit card bill in full, you get charged interest and this can really add up. It is also hard to see how much it is costing as the minimum payment will cover the cost of the interest and so you cannot see it building up, especially if you continue to spend on the card and the amount owed is going up anyway. Some people also see a credit card as a chunk of money that is theirs to spend and do not consider the cost and the fact that it needs to be repaid. If this is a problem with you, then it could be worth considering no longer using cards.


How to Pick the Best Savings Account

There are many savings accounts available, but with interest rates being so low, it can be hard to know which to choose to try to get a fairly decent return. You also need to consider how easily you want to get the money and the reputation of the financial institution you are savings with.

If you want to get to your savings easily, then you will need an instant access account. It is easiest to use one provided by your current account provider as they are easy to find, you don’t need ID to apply and you can transfer the money to your current account right away. However, there is a fairly high chance that they will not have the account which provides the best interest rate. It could be wise to compare different instant access accounts and calculate how much more interest you would receive each year if you were with an alternative company to decide whether you think it is worth going with a different one.

To get more money on your savings you will need to look at accounts which are not instant access. These come in a selection of different forms. There are the notice accounts where you will need to give a certain number of days’ notice to withdraw money and there are the fixed term accounts where you tie your money up for a certain time period, usually a year or a number of years. As the money is not accessible, it means that you need to only use money that you can afford to do without for that time period. You can usually still get to it if you have to but there will be a penalty to pay, which is usually in the form of not paying interest for a certain time period. This means that if you do have an emergency and need the money, you will be able to get to it, but it is best not to as you will end up paying a penalty for the privilege.

Once you have decided on the type of account that you need, then you will need to choose between them. Obviously the interest rate will be the key thing to look for, with the highest rate being the one that will give you the best return. There are comparison sites where you can see which have the highest rates and they can be really useful. However, they will not list every type of account and you may want to take a look at other places for yourself or other websites which look at a bigger spread of accounts. You could always consider using an independent financial advisor to help you, but you will have to pay them and it will only be worth it if you have a lot to save and so the amount that you pay them will be covered by the increase in interest you get due to their recommendation.

Some people will also look at other factors as well as the interest rate and it is worth considering this too. They might want to put their money in a financial institution that they have heard of and that they trust. They may worry that rates may quickly change so research them to see which ones tend to keep their new customer rates for a long time. They may want a local branch so that they can talk to staff face to face. So there are a few other things that you might want to think about as well as interest rate alone. It is worth spending a bit of time finding out more about what is available and thinking about which savings account will be the best to suit your needs with regards to all of the factors as well as just interest rate.

It is worth spending time doing some research though. It could make a big difference to your peace of mind as well as the return that you get form your savings. Although with interest rates low, even on bad credit loan accounts, there is not that much interest paid on any savings accounts at the moment, finding the highest rate can still make some difference, particularly if you have a lot of money to save.