Now life is stepping back up again, spending is also increasing – and it’s daunting. It’s harder if you have heavy credit card debt and payments looming and your bank balance is sinking. Cue anxiety.
If that’s how you’re feeling, reassessing your spending habits and expenses and taking control of your personal spending will liberate you! Having control over your finances and keeping track of your spending is a strong path to a life less stressed.
Here are some ways you can step towards a financially stable life:
Make a list of all your expenses and prioritise the list
Those monthly fixed payments – your rent or mortgage payments, phone bill, gas and electric, credit card repayments, car insurance, gym membership, Netflix subscription – are the first expenses to evaluate.
Then there’s the food shop to consider, going out with friends, maybe travel expenses, maybe the lunch you buy at work or that coffee to go you get every so often. These, and more, are all your monthly expenses – and recognising them will help you take control of your spending.
Tip: if you’re listing your expenses to fathom your monthly budget, add £5 to every expense, for a pleasant surprise at the end of the month.
As you review your personal spending, fixed monthly payments and general expenses, consider what you really need. List your expenses from Most Important to Least Important to work out what you can afford: the Netflix subscription and rent aren’t really on the same level of dire necessity, are they? But you might really need to binge watch Stranger Things, and that’s OK. Your non-negotiables are your priorities in this list – be honest with yourself about what you really need every month and what you can cut back on.
Pay off high interest debt
Yes, small payments, like £3 for your lunch every day, add up, but the hard-hitters are your credit cards. If you’re in your overdraft and you have a credit card, or multiple credit cards, find out which charges the most interest. They are costing you the most money, so paying them off first will really help. Plus, ticking off a debt is an amazing feeling and will motivate you to do the next.
Financial struggles can take a huge toll on your mental health. If your credit card feels like a burden and is causing you stress and anxiety, cut up the card and remove it from your default online payments or phone while you pay it off. Then when you make that last payment, you could consider cancelling it. A paid off credit card still in your life is far too tempting.
A great alternative to high-interest credit cards are low-cost loans. At Salad Money, our fair and affordable loans break the cycle of toxic loan companies exploiting hard working NHS workers in need of financial support.
Never underestimate the importance of an emergency fund
You don’t think you’ll need it, until you need it. Scrambling to pay for an unexpected charge is horrible. Be kind to yourself, save future you from unnecessary stress and set up an emergency fund. In general, an emergency fund is at least 3 months’ worth of living expenses – your rent, phone bill, weekly food shop, and so on. If you’re paying off credit cards and working on budgeting, that’s a daunting amount to consider.
Instead, you could set up a personal emergency fund that can bail you out of smaller unexpected expenses, like a parking ticket, new washing machine, etc. You can start by paying £50 a month straight into your emergency fund on payday – if you don’t see it, you don’t miss it.
Tip: Monzo pots are fantastic. You can set up regular payments depositing X amount every week, month or year.
Budgeting for socialising and holidays
Saving your pennies doesn’t have to be for boring (but necessary) grown-up reasons – the expenses in your social life are maybe just as important.
To budget for fun trips, add ‘going out’ to your list of expenses and start to get an idea of how much you want to spend on socialising, going to restaurants, the cinema, bars and so on. Be honest with yourself about how much you think you’ll spend on fun stuff so you’re left with an accurate (as much as it can be) number to work with.
If you really want to be nice to your future self, a designated ‘holiday fund’ is a winner. Using your monthly paycheque to pay for a holiday – however tempting that might seem at the time – will land you in hot water when you get home, check your bank balance, and get a bitter dose of reality. The monthly payments don’t go away just because you do. Holiday blues are real, you don’t want to make them even more painful by struggling financially afterwards, thinking wistfully back to when euros felt like Monopoly money.
Controlling and prioritising your expenses shouldn’t have to mean that you compromise on the things you enjoy, and your financial situation doesn’t have you keep you up at night. With Salad Money, you know you’re getting a fair loan from a truly responsible lender. If you want to talk about your options, please get in touch.
