Budgeting for 2021: A Practical Guide

Budgeting can be hard at the best of times, but in difficult times such as a pandemic, it can seem even more trying. For many people, recent events may have led to a change in financial circumstances. However, knowing how to budget effectively is an important tool in helping us to use our money efficiently. Here are some practical tips to help you get to grips with budgeting.

Get to Know Your Money

It is impossible to budget effectively if you do not know you finances intimately. When creating a budget, familiarise yourself with exactly what goes in and out of your bank and when each month. Get to know your expenses and your spending habits, and you’ll be able to see if there are any changes you can make, such as changing the dates of direct debits, to manage your money better throughout the month. 

There are many ways to do this, such as logging all your expenditure in a spreadsheet or using an app to help you track your spending. Pick a method that best suits your tech experience. 

Change Your Mindset

We are creatures of habit, and once in a routine, we can find it difficult to change. When starting to budget, it is important to be flexible – you need to be willing to change your habits to see an improvement. It can be hard to see your finances on paper, but it may give you the motivation to make positive changes. It may prompt you to find pleasure in less expensive things, such as a fun night in instead of a night out, or buying pre-loved instead of new.

Have a goal in mind, such as a weekend away or paying off a loan. Working towards a goal is far more motivational than cutting your spending for no good reason. 

Prioritise & Plan

If you are trying to make ends meet, chances are that you will need to make some sacrifices. Which expenses are necessary, and which can you live without? Little treats here and there may add up to a lot more than you realise, and you may be quite happy to reduce them. When grocery shopping, try switching to supermarket brands, and plan your meals in advance so that you only buy what you need. Never go food shopping on an empty stomach!

Have a Backup Plan

If you are in a particularly difficult spot financially or are trying to save a considerable amount of money for a specific event, you may decide to take more drastic measures. Have a plan for extra work you could do to earn a little extra in times of need, or consider altering your living arrangements temporarily. You could downsize your home, or temporarily house-share for a while and save a significant amount of money. You don’t need to sell your belongings to do this; instead, you can keep them in a self-storage facility, such as Safestore, who offer packages for a full scope of needs. The cost of self storage with Safestore is potentially a fraction of what you would be spending on rent or mortgage payments.

Budgeting isn’t just for when times are hard, or for people with limited finances. Budgeting can be used by anyone who wants to make sure their hard-earned cash goes to good use, and many people don’t realise how much money they have been wasting until they take a good look at it. If you can, try to put a little money aside each month, so you have something to fall back on if need be.

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