Nobody likes talking about money, it’s just not cool. But sometimes it’s necessary and what better time to get everything in order than Spring. It’s still cold enough not be out in the sun all the time so it gives ample time to sit down and sort through everything. What good is having a tidy house if you haven’t got a tidy bank account? There’s not better time to sort out your finances and give them a spring clean.
In a previous life I was a Bank Manager so learnt a thing or two about budgeting through the hundreds of people I sat down with to support them through their finances. There are a number of reasons people find it difficult to budget and I’ll do future posts on some other areas of managing money. But the key thing is that people genuinely often do not know how much is coming in and coming out of their bank accounts each month.
If I asked you to tell me right now exactly how much you get paid a month you will probably be able to tell me. What about how much your regular payments are: direct debits, standing orders, mortgage/rent, subscriptions, charity donations etc. Do you know exactly how much they total up to? If you do well done – I certainly didn’t until I sat down and worked it all out.
When you set up all the different payments for the bills they were probably done at different times and in no particular order and all on different dates – I know that’s certainly what happened with me. As a result the money comes out all through the month and then it’s very hard to keep track of how much you have left for food shopping, online shopping and going out.
The best way I have found to deal with all this financial drama is to simplify it. To do this all that is required is a second current account to transfer all the direct debits and bills into. This is then funded from the current account on a monthly basis to ensure there is enough money in for when the debits come out. The bills can even be organised neatly to come out around the same date so it is clear what funds are in the account and when.
The 8 Steps to go through to do this are:
- Print out your bank statement
- Highlight your regular payments
- Look for opportunities to save
- Make the savings you have identified
- Set up a new “bills account”
- Move your monthly payments to the “bills account
- Set up a standing order from your current account to pay your bills account
- Calculate your monthly budget
For all the detail on each of the steps I have created a video which you can view below or watch on YouTube by clicking the link here:
Please note: The information in blog post is one tool for budgeting and managing finances. If used it should be done taking into account the full financial circumstances of an individual. If in doubt always speak to someone at your bank about your individual circumstances. If you are in financial difficulty there are organisations you can consult and who can help such as the National Debtline https://www.nationaldebtline.org/