Every year, without fail, we make the same New Year resolutions that seldom last more than a day – I will stop smoking; I will go on a diet and lose 10lb; I will spend more time at home and less at work. Why not make a resolution with a difference for 2014? Undertake a plan to save as much money as possible. These tips are designed to help you persist throughout the year.
Split an Unexpected Windfall
When you receive extra money from any source, you immediately want to spend it on one item. If you employ the “rule of thirds”, this windfall can fill many holes. The process is simple: the money is divided into three equal parts, whereby a third is used towards the past, present and future. Past allows you to pay off any debt you still owe, while present can be used towards a personal purchase or home improvement. Future allows you to put an amount into an appropriate savings/investment plan.
Maintain an Emergency Fund
There is always some unexpected event that sets us back financially if we are not prepared. To prevent individuals from going further into debt, it is suggested that you keep any sort of emergency cash fund at the ready. This fund should preferably be kept in a money market account, so you can enjoy easy access to your cash when you need it, and your cash will earn more interest than with a general savings account.
Leave the Plastic at Home
Somehow, when we go to the shops we always end up making that one purchase that did not make the original list. The problem is, no matter how little or big these purchases are, your bank account will not magically grow in numbers overnight, and sooner or later your funds will run low.
Unfortunately the ever-availability of various ATM cards and credit cards makes it easier to spend without thinking about tomorrow. One way of controlling this, is to only go shopping with cash in your pocket. That way you know exactly how much money you have at your disposal and cannot be tempted to make a spur-of-the-moment, overpriced purchase.
Budget, Budget, Budget
It may not seem like it, but budgets help you to create some kind of financial order to your apparent financial disorder. However, do not sit down and try to tackle your complete monthly budget in one go. It is acceptable to take more than one day in order to carefully break down and organise your finances according to priorities.
Ensure that all your expenses are included, even to the last pound. Try to determine where you cut some money in order to pay down some long-overdue debt, or even just to add to your savings. The most important aspect is that you have to make sure your spending does not exceed your total income. This will mean you are on your way to reach drowning debts; something we are not aiming for in 2014!
John Denman is a financial planner, who understands very much the importance of budgeting and managing your finances well. Even when you spend less money, you can feel more free when you are in complete control of your finances. From simple things like shopping online at www.buyforlessonline.co.uk to leaving your credit card at home, it really is possible to survive on less.