Ways to fine-tune your family finances

Budgeting is vital so we know where our money is going - and if we are short can find ways to either cut back, save by switching or ditching or look for opportunities to try and boost our income.

Many of our household budgets will have changed drastically due to the crisis and without tackling this issue and getting on top of our finances we will always be trying to play catch up.

Knowing where you stand financially - exactly what you have coming in and going out - is the only way you can take control.

Budgeting is vital so we know where our money is going - and if we are short can find ways to either cut back, save by switching or ditching or look for opportunities to try and boost our income.

And while you will likely have found a way to manage any knocks to our finances during lockdown, but as we ease out of that we are entering another stage of this crisis and our situation could be changing again.

Andrew Hagger, independent finance expert from Moneycomms.co.uk, says: “Drawing up a budget is essential if you want to be in control of your money so you are able to save and make positive financial plans for your future.

“If you don’t have a close handle on your money, it can potentially cause you issues - for example, you are less likely to spot fraud on your bank account and/or could end up slipping into overdraft and facing hefty bank charges as a result.”

Eight steps to brilliant budgeting

Create a monthly budget:  A monthly budget doesn’t have to be complicated - you can set it up in the way it works best for you. You could use an App on your phone, a spreadsheet on your laptop, use an online tool or simply draw up a handwritten version in a separate notebook if that’s easier.

Include all income and expenditure: For a budget to work, it should include ALL your income and expenditure, so it’s vital that you go through your bank statements and credit card statements to ensure you include everything that you pay regularly and other spending such as socialising and non-essentials. Work out a monthly allowance to cover those annual expenses such as birthdays, Christmas and the car maintenance and service. 

Disposable income: Once you’ve listed all your outgoings and income you will hopefully be left with a positive figure - your disposable income - ideally you’ll save a bit of your disposable income each month so you’ve got some spare cash in a separate easy access savings account for emergencies. If things don’t add up this is where you need to work out if you can cut back or cut out anything - you need to weigh up every item on your budget planner and be ruthless about those you can do without. Also, go through all your bills to ensure you are on the best possible deals. If you have expensive debt - the more money you can free up from non-essential spending the more you can pay towards your debt and get it cleared quicker and cheaper.

Carry a notebook: Carrying a pocket notebook to jot down every cash transaction can help. Try carrying a pocket notebook with you for four weeks and write down every cash transaction - even if it’s just a sandwich or coffee - and you can then have a clearer idea of where you spend your money day to day.

Separate your money: If you struggle not to dip into money that is ear-marked for essential bills you could use an app to help you keep dedicated pots. Or open a separate account, with no debit card attached to it so you can’t dip in, and keep that just for paying regular bills. You could also do your own version of the old-fashioned way people used to ensure they had cash for essentials, tucking separate amounts in jam jars or tins when they got paid to pay the electricity bill or the milkman. You can use a similar system and separate your money into different pots for spending on different things - like food shopping, energy bills and rent.

Keep an eye on your bills: As many people are working from home some bills may be higher than expected. It could be you are going over your mobile phone data limit and getting hit with excess charges. Or your energy or water usage may have gone up. Check to see if your current deals are right for your level of usage and if not see if you can switch, or make a note of when a deal comes to an end so you can move then and don’t end up paying way over the odds. It’s good to make a note of when financial product terms end, so you don’t end up automatically moved onto a deal that benefits your provider, but costs you more.

Keep an eye on your bank statements: Whether you do online, mobile or old-school banking keep an eye on your account. Firstly, to ensure everything is correct but also so you know when your funds are low and need to tighten spending until you get paid again. 

Revisit your budget every six months to make sure it is still accurate: Ideally you’ll make changes as you go along if any of your direct debits increase (or decrease if you’re lucky!).