A money makeover is when you sit down and review your finances with a plan to get into a stress-free position. This relies on one main pillar: spending less than you earn.
1. Set a budget
Budgeting is essentiallygiving yourself a spend cap, based on your income.You should beaiming to spend less than you earn.
Start by working out your entire income and expenditure. You could write this down in a document or use thistemplate from StepChange.By doing this you’ll be able to see whether you’re spending more than you earn.
Just thinking about debts can be really daunting and stressful. Being proactive about paying them off can ease some of the stress and bring you closer to being on top of your finances. Try to get a good picture on what you owe and prioritise paying these off before you buy anything else or start to make savings.
By cutting back on costs in other areas of your budget, you may be able to start making more contributions to paying off your debt. This could mean cutting down on some luxuries, or it could mean making savings on your shopping bill or your energy bill.
A good place to make savings is on your food shopping bill. Create a meal plan and a shopping list.This way you’ll know that whatever you buy will last you the entire week and you won’t need to make any unplanned trips to the corner shop.
Focus on buying supermarkets’ own brand items, rather than forking out for big brand names. There’s not always a lot of difference in the quality of the product, but there can be a big difference in the cost.
Switch your energy supplier to save even more cash each month. You could potentially save £100s by finding a new supplier. Use a comparison website to find out which options would be best for you.
Make sure you are using your energy efficiently as well. Remembering to do basic things such as turning a light off when you leave a room, or only using your heating when necessary, can make a big difference to your energy bill.
5. Check if you can make extra savings
Food and utilities will probably be the place you can cut back most, however you may have other bills or outgoings where you’re overspending. Sit down and review everything, such as:
your mobile phone bill – can you switch to a cheaper contract?
your subscriptions – are you paying for a gym membership or service that you’re not using?
your streaming subscriptions – lots of us have more than just one so be ruthless and cut the ones you don’t use as much
could you get a smart meter fitted? - this could help you identify where you’re spending your money on utilities.
It might only seem like a small cost for each of these, but together you could save a decent amount of cash.
6. Set a savingsgoal
You could set a small savings goal to begin with. Aim to put away something every month. You could use your savings foran event or big purchase. You could also pull together some savings for an emergency fund.
An emergency fund is set aside strictly for financial emergencies. It’s usually reserved for things such as household repairs or car repairs etc.
If you don’t have an emergency fund, unexpected financial costs can sting hard. They can also force you to borrow money. This is less likely to happen if you have an emergency fund in place.