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How to permanently change the way you handle your money

It might feel like it, but you’re not the only person who worries about checking their account balance.

There are millions of people whose bills get paid through luck rather than strict budgeting – and millions of people who miscalculate and end up in debt.

The good news is, it’s never too late to get a grasp of your finances. Do these things now – and save yourself sleepless nights further down the line.


Know what you have to pay – and when

38% of people cannot name all the direct debits and autopayments that come out of their accounts. 56% of people cannot give accurate estimations of what all their direct debits and payments amount to.

If you’re going to get a handle on your money, it’s absolutely vital that you know what you have to pay and when it needs to be paid.

Check your bank statements or online banking and note down on a calendar or in a diary what these costs are and when they’re coming out. There’s nothing worse than going to use a cash-machine or pay for your shopping, only to find that you’ve forgotten a bill and have nothing left over.

It might be a bit painful to look at all your costs – but the first step toward handling things in a more manageable way is to understand exactly where your finances are right now.


Talk to the companies you owe

It’s tempting to pretend the companies you owe money to don’t exist – especially when they start chasing you if you drop behind on payments. Unfortunately, while you might be able to ignore them for a few months, they’re not going to ignore you – in fact, putting your ‘head in the sand’ often makes things a lot worse.

Talk to the companies you owe money to. Find out how much you owe and what the current state of your account is. If you’re struggling, you might be able to negotiate different payments or repayment terms.

Note down everything owed to companies who have given you credit – you don’t have to pay it off right now, but it’s useful to have an idea of how much your outgoings are and for how long those outgoings are going to need to be paid.


Create a budget

Making a budget doesn’t have to be hard. Add up all your household incomings, take away from that the essential bills you have to pay – and you’re left with an amount known as your ‘disposable income’.

You can work out how much of this disposable income you can spend each month, week – or even day, then, working within these figures means you’re far more likely to find yourself free from financial issues.


Set yourself allowances

Cards can be great can’t they? But they can’t tell you when the next round of drinks or lunch-time panini will take you over your agreed spending limit for the week.

When you work out how much you’ve got to spend over a period of time – consider taking ‘bitesize’ chunks of cash out of the bank. You can keep it securely in a safe or lockable tin at home – and the fact that it’s cash means that you’re never going to be able to spend more than you’ve got there.

It’s no coincidence that debt rises more quickly when money becomes abstract – rather than being in your hand. If you can see the amount – you stand a better chance of sticking to a spending plan.


Keep your receipts and note them

This might sound like a lot of hard work – but in reality, keeping and logging your receipts is only going to take you a couple of minutes each day – and it can shed a LOT of light on your spending habits.

Studies show that people underestimate their ‘incidental’ spending enormously – sometimes by up to 300%! By adding up your receipts you’ll get a true picture of what you spend your money on. You might want to start colour-coding too? When red means ‘takeaway’ and there’s a lot of red sneaking into your spreadsheet, you know it might be time to spend that money on a good cookbook instead!


Set yourself a goal

For a lot of people, a financial goal is just being able to get through the month without running out of money. Whether you’re struggling – or hoping for a beach holiday in the Maldives – making your goal known is an important part of getting there.

Write down where you’d like to be in a month, a year – or even 10 years. Perhaps consider writing it somewhere prominent so you don’t forget it?

By setting a goal and thinking about it each day – you’re more likely to keep on top of your good money habits – and not let spending run away with you.


Question everything

Questioning every purchase is really important – even more so when you’ve got a goal in mind.

Instead of going on auto-pilot when you’re shopping or spending – ask yourself “Is this going to take my closer to, or further from my goal” – and act accordingly.

Now, there are some things that can’t be avoided – so in that case the answer might not matter – but by calling every transaction into question, you give yourself chance to assess your daily lifestyle and see if it’s in line with your long term hopes and dreams.


How does spending make you feel?

For some people, spending is a way of getting a feel-good hit that might be missing in their life otherwise.

Don’t underestimate the power that spending money has to make you feel good – and if that is that case, you’re not alone – not by a long way.

If cutting back on spending money has you feeling down, we urge you not to suffer without talking to someone. Perhaps start with your doctor – there’s an increasing realisation from medical professionals that money has a significant effect on people’s mental and physical well-being – so they’re almost certainly able to point you in the direction of support if your relationship with money is becoming difficult.


Be accountable to someone

Finally, don’t be ashamed! We can virtually promise that there are friends and family close to you going through exactly the same money worries as you. As the old saying goes – problem shared is a problem halved, so talk to someone you trust about your money situation.

It’s always nice to have an ally onside when you’re facing the money issues you’ve been avoiding – and they can keep you on track when temptation kicks in – and who knows, maybe they’ll want you to keep them on track too!

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