Energy prices have exploded in 2021, due to rapidly rising wholesale costs, and this has sent the energy industry into meltdown, with a slew of electricity and gas firms collapsing. Many experts agree that as a consequence gas and electricity bills prices will inevitably increase. This could be the perfect time to get your finances in shape by looking by budgeting.
- Make and stick to a budget. Making and sticking to a budget is a key steps towards handling and managing debt and working towards a specific saving goal, such as buying a new car or a deposit for a house.
- Keep a track of what you are spending. Write down everything you buy and spend money on and add it up at the end of each month. Knowing or accounting for where every pound is being spent is a great first step to starting your savings, getting out of debt or preparing for retirement.
- Compare income and expenses. Compare all the money you have coming in against the money going out to get an accurate and detailed understanding of your finances and will show you if you are spending more than you earn. This helps you get the most out of your money. Plus if you see a £800 holiday, but there’s only £400 in your holiday account, you now KNOW you can’t afford it.
- Avoid going overdrawn. Budgeting helps you to avoid overdrawn on your bank account by spending money that you don’t have. Overdrafts are an expensive form of debt, so a budget enables you to get a good overall picture of your finances and to see where possible savings can be made to get you out of using or “living” in your overdraft.
- Be realistic. After looking at your finances, ask yourself, can you actually afford to buy something that you would like?
- Manage your debt. Deal with debt by planning realistic repayments that you can manage and afford. To work out how much you can afford to repay you will need to put together a household budget, which will show how much money is left after all your bills and living expenses have been paid.
- Saving money. Using a budget and working out how much money you have coming in and going out each month or over a specific period, will enable you to see how much money you can save.
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