Tracking & Budgeting
Do you know where all your money goes each month? Try taking a closer look at what you’re spending by keeping a spending diary. Write down everything you spend in a notebook for at least a month. Or try using a spending tracker app (there are plenty of free ones available) on your mobile phone where you can make note of everything you’re spending. This will give you an accurate picture of where your cash is going on a daily basis. Once you see this clearly, you can set yourself a budget using a budget planner and stick to it! You will be able to see if there are any areas where you can cut back. Small changes to your day-to-day spending could save you money in the long run. It all really does add up.
Money saving tips: There are many different ways to save money – it’s just about finding the ones that suit you. This will help you prioritise your spending so you can meet the absolute essentials, such as your mortgage, rent and bills.
Here are a few ideas to get you started:
- Make your own packed lunch
- Walk or cycle twice a week
- Cancel unused memberships
- When shopping, try buying own brands - and use your loyalty cards!
- Use Direct Debits or Standing Orders to pay your monthly bills
- Set yourself a budget
- Save for unexpected expenses
- Set up different bank savings accounts for different expenditure
Borrowing money
At times, it’s good to have the option of borrowing money. But it’s important to find out what’s right for you. Ultimately any loan, credit card or overdraft you use or take out will need to be repaid. There are different ways of borrowing so take time to find the right one that suits you and your current circumstances. As with any borrowing, you should only take on what you can comfortably afford.
Credit Cards
When you apply for a Credit Card, you are effectively taking out an unsecured loan. This amount is your credit limit and the credit card provider will determine the amount based on factors such as your credit history and how many other outstanding debts you currently have. If you reach the credit limit on your card you must stop using it while you pay off the amount you owe. To make sure you do not miss any payments set up a Direct Debit for at least your minimum payment each month. This can be topped up with additional payments when you can afford them. If you are having problems meeting even the minimum payment then contact your card provider as soon as possible.
Secured and Unsecured Loans
There are two types of Personal Loan: secured and unsecured. A secured loan, such as a mortgage, is attached to something you own such as your home. If you can’t repay the loan the lender has the right to sell your property to get their money back. An unsecured loan doesn’t require you to provide security against the money you are borrowing, but you are still required to pay the money you owe. With either type of loan, you borrow a fixed amount of money and then pay it back with interest over a fixed period of time. Make sure you are aware of any early repayment charges or late payment charges associated with your loan. If you are having problems meeting your monthly loan repayments then make sure you contact your lender as soon as possible to discuss your options. You may find you can make things a bit easier for a while by:
- Extending the term of your loan to reduce your monthly payments
- Find that it may be better to make cut-backs elsewhere if possible
Overdrafts
An overdraft allows you to borrow money through your current account. It can be easy to think of your overdraft limit as your spending limit but it should only be used for emergencies or short term borrowing. An Arranged Overdraft is an overdraft that your current account provider has approved for you, and you can borrow up to that limit. They will usually only charge you interest and/or fees if you actually use it. Important: Different current accounts have their own interest rates and “interest free threshold". Make sure you understand these fully before you use or apply for an Arranged Overdraft and always avoid going overdrawn on your current account if you do not have an Arranged Overdraft agreement in place.Make sure you are aware of the following key information before applying for, or using, an Arranged Overdraft:
- The monthly account fee (If you have a current account that charges one)
- The “interest free threshold” (If your current account has one)
- Arranged Overdraft Usage Fees
- The interest rate for an Arranged Overdraft
Tools and Calculators
There are lots of free, online tools available that can assist you with managing your money more effectively. Try searching for:- Budget Planners
- Money Health Checks
- Debt Health Checks