Set all your direct debits to the same monthly date

Setting all your direct debits to the same monthly date can significantly simplify your budgeting process. Having bills scattered across different dates can create unnecessary confusion and make it harder to keep track of your finances. So, take some time to review your bills and see if you can align their payment dates as it makes budgeting for the month a lot easier.

For us, as self-employed individuals paying ourselves on the 26th of each month, we initially had bills scheduled for the last Friday of the month. To avoid any payment conflicts and ensure that we always have our income before the bills are due, we made an effort to set as many direct debits as possible to go out on the first of each month. This way, we are certain that our pay has come in before we handle our bills, giving us a clear view of what's left for the month until the next payday, which might be four or five weeks away.

While we were able to synchronise most of our bills, there were a few companies that couldn't change their payment dates, which proved to be a tad frustrating. For instance, our council tax at our old address and five other bills were non-negotiable in terms of their payment dates. Nevertheless, keeping a detailed record of our incomings and outgoings allows us to anticipate each bill and stay prepared, which leads me on to the next tip…

Don’t be surprised by your outgoings

To ensure that you're always in control of your finances, it's essential not to be caught off guard by your outgoings. Budgeting effectively requires a comprehensive list of both your monthly incomings and outgoings.

If you're uncertain about the exact amounts of your expenses, a thorough review of your bank statements will provide the necessary figures for your bills. Compile all these outgoings in a place that is easily accessible and convenient for you. Personally, I find using a spreadsheet most helpful, as it allows me to make edits effortlessly each month. However, a notebook, pen, and calculator can be equally effective if you prefer the traditional approach.

My approach is to maintain a list of all our recurring outgoing bills, with fixed amounts that cannot be changed. I total these up to get an overview of the set expenses we must cover each month.

Next, I record our incomings. However, our income, being self-employed, fluctuates. To simplify the calculation, I round down our pay to a conservative estimate, ensuring that I always anticipate at least this amount.

With the totals of our incomings and fixed outgoings in hand, I calculate the difference to determine what remains.

We then allocate separate amounts for food, fuel, and savings. We divide food into four or five weekly figures to account for each weekly food shop for the month.

By handling these essentials independently, we create flexibility in our budget. For instance, if an unexpected outgoing arises, we can adjust our food expenses or refrain from depositing funds into savings that month.

Finally, the remaining balance becomes our spending money for the month. This organised approach allows us to maintain control over our finances and be better prepared for any financial surprises that may come our way.

Don’t overspend

Resisting the urge to overspend is crucial once you've allocated your spending money for the month. Overspending can lead to tapping into your savings (if available) or resorting to your overdraft or credit card, causing financial stress.  You need to learn how to manage your salary and live within your means.

An effective strategy to prevent overspending is to withdraw your allocated spending money as cash. This tangible approach enables you to have a clear visual of exactly how much you have left for the month. Additionally, parting with physical cash can feel more real and tangible than simply swiping a credit card, reducing the temptation to spend frivolously.

To maintain better control over your budget, consider dividing your spending money into weekly amounts if there are four weeks until the next payday. This way, you can aim to stick to a weekly budget, making it easier to track your expenses and stay within your financial limits.

This approach requires discipline and determination. If you exhaust your cash before the week is up, it's essential to resist the temptation to dip into other funds. You must wait until the following week or the next payday before spending again. Embracing this approach is the most effective way to avoid overspending.

As an alternative and fun challenge, why not push yourself to underspend? Consider having a no-spend week, where you refrain from non-essential expenses entirely. The money you save during this week can be either set aside for savings or added to your budget for the following week, allowing for a more rewarding and financially responsible experience.

By adopting these practices, you can build financial discipline, stay on track with your budget, and achieve greater financial stability in the long run.

Treat savings like an outgoing

Setting aside some of your income each month for savings is a crucial financial habit, regardless of your earnings. It serves as a safety net for emergencies, ensuring that you are prepared for unforeseen expenses. For instance, if your car suddenly requires expensive repairs or your boiler breaks down, having an emergency fund can prevent financial strain and the need to take on debt.

To build your emergency fund effectively, treat your savings as if they were just another monthly bill. Decide on an amount that is both reasonable and affordable for your budget, and treat it with the same priority as any other essential expense. When your regular bills are due, allocate the designated amount to your savings without hesitation, as if it were an obligatory payment.

By treating savings like a bill and consistently setting aside funds each month, you can build financial security and peace of mind. Knowing that you have a backup fund for unexpected situations allows you to navigate emergencies without resorting to borrowing money and incurring debt.

Remember, your emergency fund is not for extravagant spending; rather, it's a financial safety net to protect you and your financial well-being during challenging times. Cultivating this habit of saving regularly will not only provide you with greater stability but also instill a sense of financial responsibility and foresight.

Need more money?  Make more money!

Sometimes you can't budget your salary to cover your costs.  When you find yourself in need of additional income to bridge the gap until the next payday, there are numerous opportunities to make money from the comfort of your home. On this blog, I have shared various ways to earn money online, make money at home and through money-making mobile apps. You can explore these options in the menus at the top of my website to find inspiration and start boosting your earnings.  There are even several free money offers to get cash fast.

One of the fastest and most effective ways to make extra money is by selling unwanted items. Decluttering your home can not only create a more organised space but also serve as a means of generating income. Recently, I managed to earn almost £120 by selling items on Facebook Marketplace. The process was quick and hassle-free, with many buyers showing interest on the same day, resulting in cash straight into my pocket.

Embracing these opportunities to make money from home can provide you with the financial flexibility you need to manage your expenses and maintain greater financial stability. Whether it's exploring online ventures or selling unused possessions, take advantage of these strategies to bolster your income and achieve your financial goals.

Seek help from your employer if you are struggling financially

When struggling financially, it's important to explore various options before resorting to high-cost loans or other forms of high-interest borrowing that could worsen your financial situation. Start by evaluating whether the expense is a necessity or a want, and consider if it can wait until your next payday or if there are alternative ways to generate the funds.

If you find yourself in urgent need of money, turning to friends and family for support may be an option. However, don't overlook the possibility of seeking help from your employer as well. Some employers offer financial employee benefits, such as pay advances or loans, to assist their employees during tough times. These benefits can provide you with access to your earned pay before the regular payday or offer a loan with lower interest rates than traditional banks, which can significantly reduce the financial burden.

Sharing your financial difficulties with your employer can be intimidating, but remember that many people experience financial struggles at some point in their lives. Don't be afraid to approach your HR department or relevant personnel to discuss your situation and inquire about available solutions. Some employers have financial employee benefits and may be able to offer assistance tailored to your needs, such as temporarily stopping pension contributions or other flexible arrangements to help you get back on track.

Drawing from personal experience, when my husband and I faced financial challenges after the birth of our second child and our savings were depleted, Ben decided to communicate openly with his HR department. Their understanding and support allowed us to temporarily suspend his pension contributions for a few months, which provided the breathing room we needed to stabilise our finances.

Remember, asking for help from your employer is a reasonable and responsible step when dealing with financial hardships, and their assistance could make a significant difference in getting your finances back on track.

Cut costs to improve your budget

Tracking your expenses is a powerful tool that allows you to identify areas where you might be overspending and take steps to cut costs, ultimately improving your budget. Start by reviewing your bills and see if there are any opportunities to save money.  Without knowing your costs each month, you'll never learn how to properly budget your monthly salary, as you won't know where your money is going.

For example, after assessing our broadband bill, we realised it was much higher than it should have been. We decided to contact our provider, Virgin, and express our dissatisfaction. To our surprise, they readily offered a discount, reducing our bill by around £11 per month, leading to an annual saving of over £100 with just a simple request.

Additionally, we took the initiative to switch energy companies, which resulted in a substantial annual saving of £264! By proactively reviewing and comparing our outgoing bills, we were able to identify cost-effective alternatives and secure significant savings over the year.

It's worth working through all your outgoing bills to see if there are opportunities to switch providers or negotiate better deals. By doing so, you can potentially save hundreds of pounds over the coming year, significantly improving your financial situation.

Using budgeting apps for better financial management

In addition to trimming expenses and seeking financial support from your employer, technology can also play a crucial role in improving your budgeting efforts. Budgeting apps have become increasingly popular as practical tools to track and manage finances effectively. These apps offer various features such as expense tracking, budget creation, goal setting, and personalised financial insights.

With budgeting apps, you can easily monitor your income and expenses in real-time, helping you identify spending patterns and areas where you can cut costs. They can also provide alerts and reminders to ensure you stay on top of your financial goals. Many of these apps sync with your bank accounts, making it convenient to categorise transactions and generate detailed reports for better financial planning.

Research and explore different budgeting apps to find one that suits your needs and preferences. Whether you're managing your personal finances or planning your family's budget, these apps can be valuable companions in achieving financial stability and making informed financial decisions.

Final word on how to properly budget your monthly salary

In conclusion, budgeting is a practical and sensible approach to take control of your finances each month. With proper planning and willpower, you can make your salary last throughout the month and avoid relying on credit to meet your expenses. The process for how to budget properly may seem daunting at first, but with the awareness gained from tracking your expenses and the determination to cut costs, you can achieve financial stability and peace of mind.

 

Related blog posts:

• 3 easy ways to save more money and increase your family’s savings balance
• Why saving an emergency fund is a great idea