A practical guide full of money saving ideas and budgeting tips
Coronavirus (COVID-19) advice. Please note, some travelling and holiday tips in our better budgeting guide may be affected by COVID-19 restrictions. For the most up to date information, support and advice for your area, please check GOV.UK.
It’s important to know how to budget money
Saving doesn’t have to be a challenge and the rewards can soon add up. You might be surprised by how much you could cut costs, simply by creating a budget and sticking to it.
What’s more, having savings to rely on can be a source of comfort.
How to make a budget
Learning how to live on a budget takes time, it requires change and a little bit of commitment. You’ll need to be organised about it and find an approach that works for you. The reward is worth it.
Track your spending - are where you could cut costs
Start by reviewing all your outgoings such as monthly direct debits, standing orders, food and any other spend. This should give you a good idea of your outgoings, helping you work out what’s essential and where you could save.
Check your bank statements
If almost all your spending is on cards and via bank transfers, check your debit and credit card statements for the last 12 months.
Use money saving apps
There are lots of free (you’re saving money already) budgeting and money saving apps, designed to help you track your spending and start saving. Apps like Money Dashboard and Yolt let you to see all of your bank accounts and credit cards in one place. They automatically categorise your income and spending so you can see where your money goes.
Keep receipts and record your spending
Want to do it the traditional way? Keep hold of receipts, or write down everything you spend, and put it all in a spreadsheet. Make sure you include coffees, snacks, buses, taxis and anything else you use cash for.
Identify your essentials
Once you have the figures in front of you, it’s easier to work out where you could cut costs. Make a list of everything that’s absolutely essential and decide on a budget for a week, month and year. Consider things like:
Rent or mortgage
Food and drink
Utilities, TV and internet
Loans and credit cards
Mobile phone contract
Dental care haircuts
Clothes and shoes
You can then make a budget to spend as you wish on ‘non-essentials’ with your leftover income.
Top tips for saving money
1. Pay off high interest debt first
Work out which debts attract the highest interest and prioritise paying these off. For example, transferring a credit card balance could save you money on interest over time. You could also explore the most favourable mortgage rates – and mortgaging fees – online.
2. Move loans and consolidate debts
Keep an eye on interest rates and consider moving an existing loan balance to a different provider offering a better rate. Consolidating various debts into one personal loan, or a 0% interest credit card, could also cut down your monthly outgoings.
3. Use price comparison sites
Check price comparison sites or search online for savings on things like food, financials and holidays. Shopping around could get you a better deal on TV and broadband, your mobile contract and insurance.
4. Switch to a different utility supplier
There are plenty of price comparison sites dedicated to helping you to research and switch electricity and gas suppliers. Check out some of the energy price comparison calculators out there, from the likes of Which? or uSwitch.
5. Keep tabs on suppliers and offers
Review your – and other – suppliers regularly, to make sure that you’re still getting the best deal available.
6. Explore fixed tariffs and direct debit discounts
Some providers will give you a better deal if you sign up to a fixed, annual tariff, based on your typical use. Even agreeing to pay by direct debit could get you a discount.
If you’re signing up to a fixed tariff, make sure it matches your average usage. For example, you should keep track of your gas and electricity metre readings to make sure your monthly charge looks right.
7. Get a TV and broadband deal that works for you
If you’re looking for a better price for your broadband or TV package, compare ‘like for like’. Make sure you know what sort of upload and download speeds you’ll need for your household. This will depend on how many of you are typically online at any one time, and what you use the internet for. When your contract is due for renewal always try to negotiate on the price.
8. Find discounts vouchers online
Get the best prices on restaurant meals, days out and online shopping through cashback and discount sites like Quidco, TopCashback and Groupon.
9. Turn clutter into cash
Clear out clutter and make some money by selling clothes and household items on eBay or Gumtree. You can also trade in all sorts of things, including books, DVDs and CDs, on Amazon Marketplace.
10. Get in-store discounts and rewards
Many supermarkets and stores have loyalty programmes and cards that give members discounts and rewards in-store and / or online. At Sainsbury’s you can become a Nectar member, it’s free to register and you can collect bonus Nectar points on your Sainsbury's shopping.
Budgeting tips and cutting costs
How you approach your spending will have a big impact on your how much you’re able to save. Paying close attention to how you spend, buy food and plan your holidays can help.
Food money savings ideas
Knowing how to budget for food is a great start. But being mindful of how you shop for food can help you make your budget stretch even further.
When preparing to do a food shop, use a shopping list to note down what you plan to buy in advance and stick to this
Plan your meals in advance
Choose food with long end dates
Know the difference between ‘best before’ from ‘use by’ dates. ‘Best before’ is a recommendation for when to best eat the product and you can eat it after this date. Whereas if you eat past the ‘use by’ date, a product may be gone off and could be unhealthy
Look at the cost per unit (litre / kg), rather than the price, to find the best value
Visit the reduced section to find marked down perishable items
Check for discounts and special offers
Mix value brands with favourite names
Make your own lunches and hot drinks to take to work
Batch cook meals to eat later, and use up or freeze leftovers
Money savings ideas for travel
Buying travel tickets well in advance (or last minute, for holiday packages and some other types of travel) will often get you great savings. If you travel the same route regularly, it might be worth getting yourself a season ticket.
Think about walking or cycling shorter journeys and save the car for when there’s no alternative but to drive. It’s better for your health and wellbeing as well as your wallet.
When you do drive, drive smarter . There are ways to drive that can make you more fuel efficient. Avoid speeding up and slowing down suddenly – a steady speed saves more fuel. Maintain the right tyre pressure and don’t carry more weight than necessary.
Plan holidays carefully:
Buy flights and book hotels way in advance, or at the last minute
Make good use of price comparison websites like Netflights and Skyscanner to find flights, and Booking.com for hotels
Check Airbnb to see if you could save money on a whole flat or house
Travel outside of peak periods like Christmas and school holidays
Choose value-for-money destinations, like Bulgaria, Hungary, Cyprus, Indonesia and Vietnam
Research the most cost-effective ways to spend overseas and how to keep your money safe abroad
Try not to leave appliances on standby and don’t leave chargers on constantly. Think longer-term too. Energy saving light bulbs and better insulation will help you save on bills.
Check out our guide to going green at home for more energy saving tips.
Contracts and warranties
Think about what appliances you need a warranty for. Unless it’s for a washing machine, fridge freezer or other expensive item that will cost a lot to fix or replace, it’s probably not worth it. Some items might also come with longer cover than a one-year standard warranty.
If you subscribe to any magazines or newspapers, could you cut costs by going for a digital subscription?
Be aware of automatic renewals
Set yourself reminders for things like annual insurance and subscription renewal dates, so that contracts don’t just roll over to another year. That way, you’ll have the option to renegotiate premiums, shop around for better deals and cancel anything you no longer want.
The same applies to free trials period end dates, as you’ll often be automatically charged once the trial is over.
Watch it all add up
Once you’ve set your budgeting plan in motion, it will hopefully help towards managing your outgoings more efficiently and make some savings.
Looking for more information about saving, budgeting and loans? Explore our library of guides, covering a range of related topics.
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Thinking about giving your finances a boost with a personal loan? Nectar members can borrow from £1,000 - £40,000, Non-Nectar members can borrow £1,000 - £25,000. Credit is subject to status. T&Cs apply.