Category: Savings

Budgeting for Rainy Days

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The most important financial tips anybody can implement when looking at saving money is to ensure that you have a budget in place, to try to save money. It goes without saying that without having a budget it is almost impossible to be able to keep track of your daily spend and therefore, quite often in these situations, where budgets are not in place, spending can get out of control. Now the word budget can seem a tad tedious and for lots of people who are in the process of trying to save money, trying to stick to, or implement a budget is possibly the last thing that they want to do. Budgets can be interesting though and, believe it or not, they are quite simple to put into place and over the longer term, will ultimately allow you to save money.

Working out finances

There is a simple way to work out a monthly household budget – list down all the outgoings. There needs to be no stone unturned, when looking at all the outgoings you have leaving your bank account. Take time to look at paper versions or online versions of your accounts and note down every single outgoing that you have. You may be shocked and surprised when taking an analytical view of your accounts that you have direct debits and standing orders going out of your account that you did not even know about. It is actually really easy to set up monthly subscriptions for purchases and forget about them, particularly when the monetary value is quite low. It is so easy to click on a monthly subscription off your phone and then, two months later, you forget you had it in the first place. It is therefore vitally important to ensure that you check each outgoing the have leaving your bank account to ensure that you are aware of every single penny that leaves your account.

Once you have noted down each of the outgoings that you have from your bank account, the next thing to do is to record all your income. Obviously, the biggest income into your bank account will be your salary and this should go in on a set time, every month. As well as income from salary there may be other income that you can put into this column, and this would include things such as child tax benefits the value of which increase in correlation with the amount of children that you have. You may also have pensions going into your bank account or other income from other sources all of which need to be added up put into the total income column.

Correlating Spending Figures

Now that you have an income and outgoings column, what you need to do next is to correlate the two figures and work out how much disposable income you have, once all of your income has been collated, and your outgoings have been balanced against this figure. The amount that you have left can be classed as disposable income and is the sum in which you have free to spend each month. Although we have said ‘free to spend’, this does not mean that although you have a lump sum of disposable income each month, this money can then be used to go out and purchase anything. A percentage of the disposable income should be used to funnel into a separate account which will enable you to accrue a small sum of savings each month. It can be surprising that by saving just a small amount say around £25 a month over a 10 months, this would accrue £250; although £25 does not seem quite a lot, £250 does, and this small sum of monthly savings taken out of disposable income can come in handy for a rainy day, at a later stage in the year when money may be tight.
It is always handy to have an emergency pot of money available to cover life’s unexpected events. Say for example your car breaks down, your boiler needs servicing, or your dishwasher breaks down. Relying on credit to cover these unfortunate events can prove costly and having a small emergency pot of money, which has been drawn off small outgoings each month can become incredibly helpful.

Look at your accounts!

Tyne Gateway Financial understand that it is not always easy to build a savings pot utilising disposable income each month. Most people use all their money each month and therefore live on a month by month basis. We do however believe that by accurately detailing your income and outgoings using a budget will enable you to have an overview of the household spend and may move you marginally towards having a small part of disposable income that you can use for emergency situations. Tyne Gateway Financial also strongly recommend taking a close look at your bank accounts and drilling down on what outgoings you have, because time and time again we have seen that there can be money to be saved, by taking a detailed analytical approach of your finances, particularly when considering standing orders and direct debits some of which you may not even need.