As 2024 begins, one of your New Year’s resolutions may involve getting on top of your finances. Here, we break down the do’s and don’ts of budgeting.
DO start a spreadsheet
First, it’s crucial to crunch the numbers. How much money have you got coming in every month, and what’s heading out of your account?
Seeing these figures in black and white can be revelatory. You might not have realised you’re spending so much on streaming services, or the financial impact of your takeaway coffees.
Once you understand your outgoings, you can identify where to make cutbacks – and set some savings targets.
StepChange offers a free budget template that breaks down common expenses.
DON’T use cash envelopes
During the cost-of-living crisis, cash stuffing has taken the world by storm.
This involves withdrawing money and spreading it across multiple envelopes – for your weekly food shop, essentials, utility bills, and saving for events like birthdays and Christmas.
Seeing cash physically can be beneficial – especially as it makes you more mindful before making a purchase.
But insurers are warning that this money can be stolen in the event of a break-in, and you should check that such a theft would be covered by your insurance policy.
DO sell old items you don’t need
Marketplaces on Facebook, eBay and Vinted mean it’s never been easier to sell stuff you no longer use.
Got a games console that’s gathering dust? A dress that no longer fits? Toys that your children have outgrown? You could get cash for the lot.
However, it’s important to remember your obligations. If you earn more than £1,000 a year by doing this, you’ll need to complete a self-assessment and pay tax.
DON’T automatically renew subscriptions
From Amazon Prime to car insurance, and from mobile phone contracts to magazines, many subscriptions renew on an annual basis.
Renewals may result in steep price rises – and you could be getting a better deal elsewhere.
Remember: you can benefit from a 14-day cooling off period if you find a cheaper alternative. Ringing up your current provider to cancel can also result in a better deal.
DO get into the habit of saving
Every month, setting aside funds can help you prepare for unexpected expenses.
It’s worth treating savings as a monthly obligation once you’ve prioritised your rent or mortgage, as well as household bills.
Striking a balance can be challenging. Trying to save too much may mean you won’t be able to treat yourself – and end up feeling demoralised. Worse, you may have to dip into your rainy day fund towards the end of the month.
Saving too little may mean you need to take on debt when emergencies come along.
DON’T lose motivation
Budgeting is a routine, and you should keep track of your spreadsheet regularly.
Gifts and household repairs may be more of a priority one month, while clothing and self-care take over the next.
By staying focused and getting into the habit, you’ll feel in control – and better able to invest in your financial future.
Need help budgeting? Check out one of our reviewed UK budgeting apps to automate the process.