How to make the most of your money
Money. No matter how much you’ve got, you probably wish you had more. And even if you’re content with what you’ve got coming in, there’s usually room to be smarter about what’s going out, too.
If you regularly struggle to manage your money well, here are a few tips on money management, and some ways to make money go further.
1. Know what you’ve got
Some of us have one main source of income – a monthly pay cheque that’s easy to put a single number on, for example – while others have several jobs or a second income from online.
The first step towards managing your money better is to know exactly how much you earn. Take into account any tax that isn’t deducted until later, and other unavoidable expenses, and you should be left with a figure for your own disposable household income.
2. Allow for the essentials
There are some essential areas of spending where you can still save money, for example utility bills, insurance, mortgage and so on.
You can compare these later to identify any possible savings, but for now just recognise how much you spend on these costs alone, as they’re all part of your essential monthly outgoings.
3. Budget for food and entertainment
Instead of just shopping as you go along without really thinking about it, try to budget for the food you buy and the things you do.
Already eaten out twice this week? Have a home-cooked meal and maybe don’t get takeaway again until next week – and if you often eat out at the weekend, budget from Friday to the following Thursday so your more regular spend is at the ‘start’ of your financial week.
4. Spend or save?
Once you’ve listed all of the things you regularly spend money on, think about what you want to achieve – do you want more disposable income to enjoy a richer lifestyle, or some left over to put into your savings?
If you want to enjoy yourself more, you’ll need to cut back on the bills. If you want to save, you could consider cutting back on your entertainment spending instead or as well.
5. Compare your bills
Price comparison sites are still a good place to start when trying to save money on regular household bills – just remember that some of them only compare between a limited number of sponsored products.
Compare your utility bills and look for cheaper options like dual fuel tariffs and discounts for paying by Direct Debit (this feature is coming soon!), and then switch if the savings are significant.
6. Cut your debts
It almost always makes good economic sense to pay off debts as soon as possible. There are some exceptions – a mortgage offers relatively good value, for instance, and overpaying on student loans is not always sensible.
For everything else, if you’re paying interest on a debt, it’s usually smart to overpay and clear the debt faster. Of course this depends on your own circumstances, so speak to a financial advisor or accountant if you’re not sure.
7. Bank better
If your bank account doesn’t give you many ways to manage your money, you might want to consider an alternative like the Arro Personal Account.
It’s an electronic money account that gives you features you might not get with a basic bank account, including a MasterCard® debit card, online account dashboard, Faster Payments and Standing Orders.
8. Credit or debit?
If you spend a lot on cards, consider switching to using the MasterCard® debit card that comes with an Arro Personal Account.
This is a good way to spend the money you have, rather than running up a debt by spending money that’s not yours, and you can always check your remaining balance online or at ATMs.
9. Scheduled payments
Paying for things regularly is usually better than making one-off lump sum transfers out of your account.
Consider standing orders to pay off your council tax more regularly, pay into a pension if you have one, or even just to automatically divert part of your money to a savings account so the balance steadily grows, hopefully without you noticing your current account balance is any lower.
10. Spend it wisely
Whatever you manage to save, make sure you spend it on something that’s worth it. If you go on holiday, make some good memories and take plenty of photos, so you have something to show for it afterwards.
Even if you just have a savings goal to build up a bit of a rainy day fund, it’s worth printing out your account balance when you hit your target, just so you have something you can hold and look at, and say “I made it!”