How to create and stick to a tight budget

10 simple steps to taking control of your finances.

Whether you have lost your job due to Covid or simply went a bit crazy with Christmas spending, January is a great time to take stock and adopt healthier financial habits. Burying your head in the sand will only make matters worse, so take a deep breath, sit up straight and let’s take a look!

  1. Work out how much money you have coming in each month. Include all your earnings, plus any benefits you may be receiving. If this figure fluctuates, work out the average over a 12-month period and use that as your monthly total.
  2. Work out how much money is coming out each month. If this is figure is lower than your incomings, that’s an excellent start. Anything you have left over can be spent or saved as you see fit. If not, it’s time to get to work.
  3. Create a realistic budget. Using the figures above, create a budget with a bit of contingency for irregular expenses, such as haircuts and birthday gifts. Record every penny of spending each day for a month and refine your budget if it doesn’t reflect what you’re really spending.
  4. Get rid of any unnecessary monthly expenses. Perhaps you have subscriptions you never use, or you no longer need a car because you’re working from home. Cancel anything that is surplus to requirements as soon as possible.
  5. Look for other ways to tighten your belt. Maybe you’ve been relying on takeaways or are constantly buying unnecessary items online. Cut out anything that isn’t essential, then add treats back in as your finances become more stable. If it helps to do so, cut up any credit or store cards that might encourage you to overspend.
  6. Prioritise expensive debt. If you have high-interest loans or credit/store cards, pay these down as a priority. Make minimum payments on other types of debt until the high-interest debt is paid off, then focus on the next highest.
  7. Shop around for utilities and insurance deals. You may love your internet provider or be a long-term customer with a particular car insurance brand, but are you still getting value for money? Rather than simply renewing each year, compare deals online to get the best offers available.
  8. Avoid get-rich-quick schemes. Anything that seems too good to be true probably is! It’s great to explore new money-making opportunities, but avoid anything that appears gimmicky, and carry out careful research before signing up to anything. Be particular cautious if cash or bank details are required from you upfront.
  9. Buy second-hand goods. You may be surprised at what you can find at a local charity shop or through an online marketplace. Some websites even offer goods for free. If funds are tight, it might be worth settling for items that are in a decent condition rather than paying top dollar for brand new goods every time. You may even be able to sell your own unwanted items online.
  10. Take advantage of points, discounts, cashback and vouchers. Plenty of supermarkets and other retailers offer incentives if you buy from them. Make use of any offers out there and use the rewards wisely. Avoid deals where you have to buy multiple items to make the saving, though, as these may just leave you with overly full cupboards and an empty bank account!

If you are struggling with your finances and can’t see an easy way out, talk to someone about it. Christians Against Poverty (CAP) is a great place to start, whether you are a Christian or not.