Hitting the gym to shed pounds in weight is the goal for many right now but lots of us could do with saving pounds in cash.
The first step is to make a budget and get on top of your spending.
Steve Nowottny, news and features editor at Money-SavingExpert.com, shares some expert insights and top tips.
Why is making a family budget so important?
“‘Do I spend more than I earn?’ is probably a question that everyone should be able to answer,” Steve said, adding that you must be honest with yourself, and it can be an emotional process to sit down and properly go through your spending.
“You’re being forced to face up to your financial circumstances.
Once you’ve got a really accurate budget, you’re forced to stare it in the face, and then you can do something about it if you do have financial problems.”
How can I get started?
Break spending down into chunks. Rather than just putting “travel”, this could include petrol, motor insurance and maintenance, for example.
That way, you’ll get a more realistic picture of everything you’re spending on and exactly where your money is going. This also makes it easier to do a final “sense check” to make sure each section looks accurate.
How can I work out how much I spend?
Rather than guessing, physical evidence, such as receipts and bank statements, will show the difference between what you think you’re spending and what you’re actually forking out.
Steve said: “If you do that over a period of a couple of months, you will get a good feel for what you’re actually spending.
“It might be you estimate that you spend £200 or £400 on groceries in a month – and then you’ll find over time that you’re spending more and you’ve got the receipts to prove it, and therefore you need to adjust your budget accordingly.”
What pitfalls will I watch out for?
While many people may look at how much they spend over a month, they could miss the big one-off spends, such as Christmas, holidays or a new car.
Steve thinks bills paid annually, such as home insurance, also get forgotten about. He said: “Make sure that you factor that in.”
How often should I review my budget?
“If you plan everything out perfectly at the start of the year, it’s surprising how much things can change,” Steve said.
Someone may go on a different holiday than planned, their utility or childcare bills could change or they could switch jobs, all of which could affect their finances.
He added: “If you can do it once a year then brilliant, but if you can do it more frequently, you’ll feel more on top of it.”
I’m worried cutting back will be painful
Steve suggests tackling ways you could be “leaking money”, such as by cancelling unused subscriptions, switching to cheaper energy deals and shifting debt to cut your borrowing costs.
What if I don’t have debts?
Budgeting isn’t just for those who want to sort out debts.
Steve said: “If you’re doing well, you should still be doing a budget. It can eliminate waste and it gives you visibility of your finances. It gives you an idea of what you can afford to do with your money.”
