Exercising financial restraint and frugality is often done out of necessity but it can also be a mindset that brings benefits and rewards.
It is a fact of life that you sometimes find yourself in need of some extra cash to pay an unexpected bill, which is where someone like Moneyboat UK might be able to provide a short term solution, but with some financial planning tips, you might be able to loosen up some more of your own money.
Making your money go further
If you are on a low income or simply find that you regularly find yourself running out of money before your next pay date, it is a scenario that can often be addressed with a bit of careful organisation of your finances.
Putting together a budget, so that you know exactly how much money you are spending each month and where your money is going, can definitely help you to make the most of your income.
By cheating a budget and putting down all of your income and outgoings on a spreadsheet or a sheet of paper, you can then see your finances laid out in front of you. This will make it easier to get a clearer picture of exactly where your money is going, and help you to identify where some savings might be made.
Many of us are on a fixed monthly income, so you can’t change that aspect of your finances very easily, which means cutting costs and gaining more control over what you spend in order to balance your budget.
Take a look at all of your fixed expenses, such as utility bills including gas, electric and broadband costs, and see if you can find a better deal elsewhere.
There are now plenty of opportunities to compare deals online, so that you can see easily whether there is a cheaper deal available elsewhere than you are currently paying. Switching energy suppliers is relatively easy these days, which means that if you find a deal that will save you money compared to your current tariff, those savings could find their way into your bank account in just a matter of weeks.
In order for a budget to be successful and to free up some extra monthly cash, you will need to look at your current spending pattern and once you have seen where all of your money goes each month, start to prioritize your debts and expenditure.
Obviously you will have priority debts that you can’t make any significant changes to, such as your rent or mortgage and local taxes, but mobile phone bills, regular subscriptions and discretionary payments on things like leisure and entertainment, are definitely areas where you might be able to get better deals and target potential savings.
You can often be surprised at just how much money you spend each month on small purchases like buying a coffee every day on the way to work. Divide your payments up into different categories and then set to work, looking at what you might be able to do without or cut down on, in order to save some money each month.
Jam jar mentality
You don’t actually have to physically use jam jars to put your money into different compartments, in order to benefit from the principle of applying a jam jar mentality to your finances.
What you are aiming to do, is to put your spending into different categories, as a way of balancing your books and budgeting.
Rather like saving money in a jar towards a special treat or a holiday, think about where savings can be made, so that you can start to accumulate some extra money in your “jam jar”, which could then free up some funds for an emergency, or if you want to save up for something specific without borrowing money to do it.
Once you have identified some savings that can be made by cutting out unnecessary spending or getting a cheaper deal on some of your monthly costs, you can start channelling some of this extra cash into a separate savings account.
It is important to put this money aside into a different account, so that you are not tempted to spend it, and it is then available when you need it.
With a bit of financial planning, you will often be amazed at how much extra money you can find each month.
Nicholas Krauspe is the Head of Operations at MoneyBoat.co.uk, a London based alternative finance company providing unsecured consumer credit to residents of the UK. Nicholas has over 10 years of operations and management experience in the consumer finance sector.