We’re here to help you make your money stretch further!
You are never too young to start budgeting! Regardless of how old you are, whether or not you’re getting pocket money for the first time, earning a wage for the first time or heading off to university, it’s really good to get into the habit of budgeting your money.
Budgeting is basically telling your money where it should go instead of turning around one day and wondering where all your cash has gone. Some really simple budgeting tips include:
- 50/30/20 BUDGET
This technique is a great tool to help you manage your money month-to-month. 50% of your money goes to essentials – stuff you MUST pay for. So, things like your mobile phone contract, your car payments and insurance if you drive, and any rent or other bills you have.
30% goes to your ‘fun stuff’. If you enjoy going to the pub with friends, going to the cinema or spend money on a hobby, then this is what you use your 30% for.
20% goes to saving towards your future. Putting 20% away every month can help you build up a security blanket of cash to use when you need it most. When you’re younger and don’t have any bills or outgoings, you might want to save up for Christmas gifts or for a bigger purchase. When you’re older, savings can be used for things like buying your first car or for emergencies such as your car breaking down or an unexpected big bill.
- ZERO-BASED BUDGETING
Let’s imagine you earn £1000 a month. Zero-based budgeting is when you allocate this total amount at the start of the month to make sure you have covered every area of your life for that month. So, for example, you write down your total earnings and breakdown where it all needs to be allocated – e.g., £300 board and bills, £300 food shopping, £160 gas and electric, £100 fun, £100 savings, £40 haircut. You can use this strategy every month to direct your money to where it needs to go. You have to be strict with yourself to make sure every single pound is accounted for each month.
- ENVELOPE METHOD
People used to get cash in hand when they were paid. They’d then separate this money into physical envelopes to pay different things – utilities, rent, food shopping etc. Obviously, we’re now in modern times and we have digital banking to help us create different ‘pots’ of money. This is a similar principle to physical envelopes and helps you manage your money more efficiently. You can allocate different parts of your income to different ‘pots’ to help you budget each month.