From Monday 20th January the UK debt charity, StepChange, has been running their first ever Debt Awareness Week.
Earlier this morning we posted an article written by two of the in-house team of money management experts at StepChange MoneyAware. This is a second article they have produced, titled, ‘How to live within your means’.
Step 1: Begin to budget
Living without a budget is like walking around blindfolded; sooner rather than later you’ll hit a wall. The first step to reining in your spending is to write down your income and outgoings. An easy way of doing this is keeping a daily log of how much you spend.
Now, the chances are you’ll be very surprised where your money goes every week. Even little expenses such as a sandwich at lunch or a coffee in the morning creep up on your finances. It’s very important that you don’t beat yourself up over this. You’re now aware of what you’re spending and can finally take better control of it.
Step 2: Don’t let the green eyed monster push you into the red
Spending more on Saturday nights than Prince Harry in Las Vegas? Breaking the bank to have the very latest mobile phone technology? If so, building a budget may be the reality check you need.
Don’t worry about keeping up with the Joneses, as the chances are they’re just trying to keep up with someone else. It’s a vicious cycle and one that you can step off.
A little example: If your phone bill is a bit on the weighty side, consider reducing your phone contract or cutting back on the package of texts and data. Do you honestly get through 2000 texts a month? If so, I’m impressed, you must be popular! Chances are though, like most of us, you don’t. Phone your provider up and cut that bill!
Step 3: Boost your income
Cutting back and keeping to a budget is great. But everyone could do with a boost. Are there ways you can boost your earnings? Freelancing, selling homemade products on the web, filling in surveys or offloading junk on eBay are just some of the ways that the public gain extra income.
Also, don’t forget that billions of pounds of benefits go unclaimed every year. You could be entitled to tax credits or help with your council tax or rent. Our free tool offers an online benefits check.
Step 4: Want it? Need it? Afford it?
The thing with using credit cards is there’s a temptation to buy on impulse. Getting the latest gadget may feel good at the time but when the thrill has faded the bill lives on.
If you see something you want, always ask yourself – do you need it? If I see something I want in a shop, I always walk away from it. If I’m still thinking about it the next day, and it’s in my price range, I might go back. The amount of times I’ve seen something I want but walked away…I’ve saved myself some serious impulse buyer’s guilt over time
Step 5: Save yourself
If you really want something bad enough but it’s outside your budget, then set yourself a saving target. Make it so you can enjoy your shiny new purchase without dreading the credit card statement.
The best and most realistic way to save is to work out what your disposable income is every month after living costs are paid. Then divide up the cost by the number of paydays you have left. If you can comfortably put half your disposable income aside for it for a couple of months, then you’re on track.
Step 6: Reward yourself
So you were on the slippery slope to debts-ville. You’ve pulled your socks up, made a budget, cut-back, boosted your income and started to save. You now live within your means. What comes next is the most important…relax and enjoy!
Don’t forget to reward the new you every now and then with a small treat – a little of what you fancy does you good!
Throughout Debt Awareness Week StepChange Debt Charity will be talking about the danger signs of debt and how to deal with them. Use their tool to find out the StepChange Debt Danger Signs test to see if you need debt advice