Money Managements Tips

I've been quite hesitant to write a blog on money management tips as I'm not a financial advisor. The experience I do have is debt advice (which is my current job) and I have a home with my husband and we both manage our money well and thankfully have never been in debt. Sadly there has been a lack of money education in the UK and as our parents weren't necessarily financially educated either it is resulting in generational patterns of debt and money struggles. I see first hand in my job what debt can do and so I want to share some of the practical things Andy and I do to manage our money well.

Tip #1 - Budget your money

What does this mean? This means sitting down either by yourself or with your partner/spouse and work out what you earn, how much you spend each month and how much you wish to save each month. Andy and I personally like to use a spreadsheet and if anything changes to our finances we revisit the budget. This helps Andy and I enjoy life more as we know we've budgeted for that meal out or that cinema trip. I would encourage you to follow this order:

- List your income

- List your main bills (such as rent/mortgage, utility bills, mobile phone bill etc)

- List your extra essentials (such as petrol and food)

- List your non-essential expenditure (such as eating out, social activities, gym membership etc)

- List your planned savings (such as a holiday, saving up for driving lessons, dental costs etc)

- List your general savings pot (this is where you can give some money every month that isn't designed for anything specific but is there as a buffer if anything unexpected happens)

If you get to planned savings or general savings and you have no money available then it might be worth reassessing your non-essential expenditure to see if anything can be reduced or removed so you can save money every month, as we will always need savings available for those one off costs.

Tip #2 - Save money in individual pots

Once you've worked out your budget it can be helpful to have individual pots. For example if you are saving £50 per month towards holidays you can keep track of this pot to know when you've got enough to book your holiday. If all your savings were lumped into one pot you could be spending money on a holiday when this money could be needed for an upcoming MOT. Saving in individual pots helps you plan ahead financially and keep control of your money.

Tip #3 - Don't buy things you can't afford

This should be obvious, but I see people doing this all the time. It's so easy to get your credit card out and buy an expensive holiday abroad and think 'I'll deal with the payments later', then later comes around and you still don't have that money, plus the interest you've now got to pay. Andy and I have a rule that we don't purchase something until we've saved up the money to pay for it. This does mean at times waiting for that new item of clothing or that room renovation, but it is essential to do this if you don't want to accumulate debt. If you can't afford it this month what makes you think you can afford it next month if you don't save for it. We need to create a mindset of saving, then spending sensibly. 

Tip #4 - Save for retirement

Sadly our generation isn't going to get the same pensions our parents have, so we need to plan ahead and make sensible decisions. If you don't want to be working until you're almost 70 you need to be making important changes now. What does this look like? Firstly, speaking with your employee to make sure you are paying into your pension and that what you're paying is going to reap you the most reward. For example where I work if you give a certain percent every month they match it, so I want to make sure I'm paying in enough to get that reward. Secondly, save into a private pension. This is something that we'll probably have to do if we want to have a retirement we can enjoy. I don't want to advise on what private pension to use, so seek professional advice to make the right decision for you and your future. 

These tips only really scratch the surface, but I personally think they are four things we all need to be doing now. If you feel like money management goes over your head and it's not something you are good at then there are courses available to help. You can also watch YouTube videos which offer insight, but please make sure the advice comes from someone who is trained.

If you want to attend a course to help manage your money please go to https://capmoney.org/.