6 steps to take control of your finances at this stage of life

6 steps to take control of your finances at this stage of life

Feel like your money controls you rather than the other way around? Take a few hours to work through these steps, and you’ll be saving in no time.

Feel like your money controls you rather than the other way around? Take a few hours to work through these steps, and you’ll be saving in no time.

Perhaps retirement is approaching and you’re panicking about how you’re going to stay above water without a steady income. Or maybe you’ve separated from your husband and he used to take care of all the finances. Or, hey, perhaps you’ve just never been very good with money – you wouldn’t be the only one!

Regardless of your circumstances, the first step to taking control of your money is to be aware of your income versus your outgoings and go from there. Follow our steps and you’ll feel more in control of your money in a matter of hours.

Step 1. Sort out your savings

First things first, make sure your savings are working for you. If you’re nearing retirement age, now is not the time to take risks with your money, but you haven’t got the time to make any long-term investments either. So ISAs are a wise choice for you. If you already have one, remember to top it up for the financial year if you can – and also do a bit of research to make sure you’re getting the best interest rate possible.

Step 2. Figure out your regular outgoings

It’s time to make a spreadsheet. In the first column, make a list of all your monthly outgoings. Take a look through your bank statements to remind yourself. It will be expenses such as mortgage payments, council tax, bills (TV and internet, gas and electric, mobile phone), gym, loan repayments, pension payments and so on.

In the next column write out your yearly outgoings, such as insurances, car service and MOT, season tickets, and even things like Christmas and important birthdays. But instead of writing the annual cost, divide each one by 12, and write that number instead, so you know how much each one would cost if you were paying it on a monthly basis (this makes it easier to save as you go).

If you have a joint account with a partner, remember to include their expenses, too.

Step 3. Now estimate your irregular outgoings

Other outgoings are a little trickier – often because, with £5 on lunch here and £40 on a new skirt there, it adds up a lot quicker than we realise.

For now, though, break the expenses down into petrol, food, socialising and shopping – and try to make a realistic guess at what you spend each month.

As above, if your partner’s spending comes out of the same account, ask them to make an (honest!) guess as to what they pay out per month.

Step 4. Add up your income

Write down your (joint) income from work, benefits, pension, any rental income and so on.

Step 5. Now do your sums…

Add up the totals for each column. Then add the totals of the first and second column together to create your total outgoings, and take this away from your income total. The number left should be what you are saving each month.

Unfortunately for many this money is in the minus, or at least not as much as you’d hoped. So it’s time to take a look at those outgoings and see where you can trim down. Did you shop around for your energy bills and car insurance? Could you make your own morning coffee rather than buy one? Can you take up running instead of going to the gym? And so on…

Simply seeing what’s going in and coming out already makes it much easier to save, as you can see where you might be going wrong. Plus you will feel more motivated to spend less and save more once you see it in black and white.

Step 6. Set some saving goals

There are three types of saving. First, there’s the essentials. These are the annual expenses you know you have to pay every year – but probably panic every time it comes around.

So now, at the start of every month, transfer the amount you need (the total under your second column) into a savings account, dedicated to these yearly expenses. So when that expense comes around, you’ve got the money ready and waiting.

Secondly, there’s practical savings – so money needed for unexpected expenses, a safety net in case your work situation changes, and of course saving money for your retirement.

The money for this should be what’s left over after your regular outgoings have come out of your account, so transfer whatever’s left into a savings account at the end of the month. You may already have a pot of money for these sorts of things, but it’s important to keep topping it up.

Then there’s saving for the fun stuff – like a holiday, a designer handbag or a nice car. This is where you get to “reward” yourself by saving money on your irregular outgoings. So if you spend less than you’ve budgeted for yourself on going out, food, shopping and so on, you’ll know that the money you saved will one day go towards a real treat.

To make this easier to keep tabs on, you could open an account dedicated to your irregular outgoings. Try Monzo, which has a debit card and app, so you can track your spending to ensure you stick to your budget – and also see what you spend your money on. Then at the end of each month, you can transfer any remaining money into a separate savings pot using the Monzo app, which can be your holiday/handbag/new car fund.

Quick saving tips

If you struggle with saving, here are some top-line tips:

Shop around

Always make sure you are getting the best deal possible. Yes, it can take time to shop around, but you can use a comparison website for things like bills and insurance, or Google the item you have your eye on before buying it to make sure you are getting it for the best price.

Use coupons

Need to buy something? See if you can get a money-off coupon for it. Even saving 50p here and there can really add up. For example, before you go shopping, be sure to check out Victoria’s coupon page and see how much you can save on your favourite products.

Spend money to save money

When you’re saving, it can be tempting to reach for the cheapest option every time. But there are circumstances when value for money is more important. For example, when it comes to cleaning products, it’s more important to buy a product that will get the job done, and with less product, so it will last longer.

Viakal Limescale Remover, for example, has a new, even more powerful formula that removes limescale better than ever. Plus it leaves behind a water-repellent layer, which prevents future limescale build-up – so that one bottle of Viakal will make your surfaces shine for longer.

For more examples on when it’s better to splurge and when to save, check out our article here.

What are your budgeting tips? Let us know in the comments section below…

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