We get it: saving money and managing your budget might not sound like much fun. But having a plan for your spending will help you afford the lifestyle you want in the future, whether that’s moving into your own place, getting a car, heading to uni or a sun-filled weekend with your mates in Barcelona. Here are five easy money management tips to help you take control today…
Work out how much money you have coming in each week or month – any earnings, pocket money, loans etc. Don’t include any money you have in savings – that’s what you’re hoping to add to! You could do this with pen and paper, on a computer or even with a budgeting spreadsheet like this one from Save the Student, or a free app like Mint. If you bank with NatWest, use the handy Savings Goal Tool in the app.
Next, write a list of all of the things you spend money on each week or month. Be thorough – everything counts, from bus fares to snacks, days out with your mates, petrol, phone bills – the lot.
Go through your list of expenses (what you spend) and mark everything you need – that’s the absolute essentials like food, bus fare, rent – in one colour. Add up how much that comes to and make a note of it. That’s your essential spend.
Take a look at the things not marked in that colour. These are your non-essential spends – the milkshake when you’re out with your mates, the new top, the gig tickets. Have a think about which of these you could go without, or swap for a cheaper option, and how much you could put into your savings if you did. The magic ratio to aim for is 50, 30, 20:
Once you have worked out how much you can save each month, keep track of your progress each day. Watch out for those small, non-essential costs as they creep in, and keep reminding yourself of your end goal. You’ll also need to adjust your budget when your income, or life costs, change – for instance, once you manage to buy that car, you’ll need to put some petrol in it. Tell your friends and family your plans, too, so they can help encourage you and sense-check your spending along the way.
Check out the accompanying video for this article and discover the five things you need to know about budgeting.