IN times of uncertainty, it’s important to plan ahead where you can, and your finances are a good place to start.
By adding up what you’re saving, spending and earning, and keeping on top of it, you’ll be able to spend less time worrying about your money as you’ll always know what it’s up to.
Plus, once you’ve set your budget and you’re on track you can stop worrying about how to pay your credit card bill and start saving for your next big purchase.
How can a budget help me?
Finances are different for everyone, but there are some budgeting tips that can work for us all – let’s explore some of them. Firstly, by keeping on top of your bills and credit card payments you will avoid late payment fees.
Not only will this leave you with more money to spend, but it could also benefit your credit rating.
Making your payments on time shows credit reference agencies that you’re good at managing your money, so it’s likely to help improve your score. This, in turn, could reduce your bills in the future as you may get better deals on credit cards, loans and mortgages.
How do I set a budget?
As with learning anything, it’s easier to learn to budget if you break it down into smaller chunks.
- Track your expenses. You may initially know how much your rent or mortgage and bills cost, but how about your other regular expenses? These can have a big impact on how much you have left over at the end of each month.
- Do some detective work. Investigating your recent bank and credit card statements can help you identify those other regular expenses. For example, is your morning caffeine fix adding up? You might think you don’t need to budget for your daily £2.50 latte, but over the month this can cost up to £75!
- Add up your outgoings. Once you’ve done your investigations you can split your spending into categories like “rent”, “food”, “bills” and “going out”. You can do this in a spreadsheet of your own, ortry the Barclays Budget planner to help calculate your monthly commitments and work out how much disposable income you’ll have left.
- It’s important to be realistic here, as these categories will form the basis of your budget – so if you don’t think you can go without your daily coffee, or your weekly night out, then make sure you budget for it!
- Work out what is left. Once you’ve worked out your outgoings, tot up the total and subtract it from your total monthly earnings. Whatever is left is all yours! This is called your disposable income, and it’s there to use for little treats. You could also use this money to save, or to pay down any debts you may have.
- Circumstances are changing fast in the current climate, so to ensure you’re in control it’s important to review your budget every few months. You never know, you could make even more savings!
Budgeting and paying off debt
If you’re considering using a credit card then you should make sure you can afford the monthly payments on time so that they don’t end up causing your to go against your budget.
When paying off multiple credit cards (or loans) your budget sheet is really important to ensure you’re doing this in the fastest and most affordable way possible.
It’s best to first tackle the cards or loans with the highest interest. This helps you to reduce the outstanding balance faster.
If your budget allows you to, it’s a good idea to pay more than the minimum repayment each month, and wherever possible pay the outstanding balance in full.
This may leave you with less disposable income in the short-term, but it could improve your credit score and reduce the amount you’re paying in interest and fees, meaning you’ll be much better off in the future.
Click here to head to the Barclaycard Get Credit Confident Hub for more helpful videos, tips and tools.
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