Prioritising your daily, weekly and monthly outgoings can be difficult, especially at this time of year when budgets are stretched to accommodate the holiday season.
While budgeting isn’t exactly an a favourite past time, doing it properly could mean the difference between booking a luxurious spa weekend for two or a throwing a couple of face masks into the trolley on your weekly shop.
In more serious terms, ill-proper budgeting may leave you and your family vulnerable to unexpected life events.
1. Understand why you’re prioritising money
A good place to start is to consider what your goals and visions are for your financial future. After all, there’s not much use prioritising if you’re not sure why you’re doing it in the first place.
It may be that you want to aim towards being financially free, or it may be that you want to safeguard your home and family against all eventualities.
This will allow you to prioritise your outgoings based on how closely they align to your goals. For example, if peace of mind for you and your family is at the top of your checklist then your life and critical illness premium would likely take precedence ahead of satellite TV subscription.
Knowing what you value most determines what you spend your time on. And what you spend your time can help determine what you spend your money on.
2. If you don’t already have a money management system, make one
Once your priorities have been hammered out, it’s time to consider adopting a well-thought-out system to ensure your finances are properly maintained.
Ultimately, the easier it is to do, the more likely we are to do it. Formulating a plan that’s simple and effective is great, but it’s important to make sure it works for you.
It may be that you prefer to review your books monthly by looking over your statements and highlighting spends that can be consolidated. On the other hand, you may find it easier to separate your outgoings into ones you review annually, and ones that you review more often.
- Implement good habits
Breaking your financial go-to routines doesn’t happen overnight. It takes conscious effort and an element of faith to break habits and forge new ones.
It may be that you have a splurge-on-a-new-pair-of-designer-trainers habit. It could be that a £30 per class spinning habit is more your thing. We all love to splash out every once and a while, and more often than not, it’s habitual.
Taking a step back to understand your spending habits can help you make conscious decisions to form habits that are more in line with your goals.
Here are a few easy tips to improve your financial habits:
- Say “no” to purchasing for an item once a day. This can be a powerful tool to save on small purchases, which can amount to a lot.
- Read something financial every week. Making a habit of consuming financial information through news or books can expose you to fresh ideas that may help you improve your financial standing.
- It’s time to talk about money. Money is one of the main reasons for divorce, so leaving the topic of money open for conversation may be an effective way to make sure everyone is on the same page. You may want to teach your kids some fun lessons about personal finance, or discuss your financial goals as a couple.
Here are a few helpful apps to help you manage your money easily:
- Mint: Helpful for managing your money
- Spending Tracker: Helpful for tracking expenses
- Acorns: Best app for painless saving
Achieving the life you want to live is ultimately up to you. And managing your finances in the best way that meets your goals is a sure way to help you get there.
Start by 1) knowing where your priorities lie, 2) adopting a money management system that works for you, and 3) implementing habits that will allow you to succeed.