As our children have now gone back to school – it’s time for the adults and parents to start their own financial schooling for the year!
There are 5 broad principles to money saving and money making:
- Being aware of inflows and outflows
- Control and management of debt
- Money making and the future value of money
- Taking responsibility for financial future
These are the same if you’re looking at a household budget, an investment portfolio, or a business.
The first of those is being aware of money flows – and that’s the money coming in and going out as that awareness will give you control and will guide you to creating ‘spare’ money each month.
Gill’s top tips:
1. Write down your income and everything you spend each week
That can be on a rough sheet of paper, or a fancy app you download, but however you do it, note everything you spend (even the spare cash in your pocket).
2. Spilt your spending into groups
For example, say home (housing), living (inc. gas, utilities), travel, personal and financial costs, so you can see where all your money goes each month/week.
3. Set a target to spend slightly less on each category
Try to spend slightly less on each category over time. For example, ‘to save 1% per month on food shopping’. You can either save per category or just spend less overall – but always note down where the money has been saved. Challenge yourself to spend less – have it as a game and include the whole family.
4. Be reassured that you know where your money is going
You can then make lifestyle decisions from that – say to eat at home more or eat less take aways – but you now have the information to get control and choice.
Then you’re not completely devasted when the gas and electricity issue we have now arises because if you need to, you can…
5. Go back over your spending and see where you can cut money, for payment of increased heating costs.
N.B. It would be very difficult to reduce gas prices this week, so you wouldn’t be able to do that at the moment so you’d concentrate on other areas of your spending instead.
As always it’s about flexibility, responsibility and control – and giving yourself tools to cope with crises like the current gas issue.
Want to learn more about managing your money? Take a look at our NEW fun and interactive money management online courses!