How to keep control of your money –
What we're covering..
Earning enough money to live comfortably can be one of the biggest stresses in life.
As life gets more expensive, there just never seems to be enough money to go around!
Today we’ll teach you some tricks to help you feel more in control of your money.
Disclaimer: This website provides information for guidance and educational purposes only. The Grown-Up School does not provide regulated financial advice. You can seek independent financial advice from a suitably qualified and regulated professional advisor. Check out our disclaimer policy for more information.
The trick to always having enough money – “make a good amount of money – spend as little of it as possible”. 💰
In other words, keep your income high and your expenditure low.
Expect some grown-up words ahead —
Income = money that you receive/make. – Make your income as high as possible to have lots of money to keep.
e.g. making money from your job, selling old clothes, self-employment, getting paid extra money from your savings account, money the government gives you (benefits)
Expenditure = money that you spend. – Make your expenditure as low as possible to hold onto your money.
e.g. money spent on food, bills, housing, clothes, entertainment, transport, tax
Reduce your spending as much as possible, to help you hold onto your money.
This is a trick that even celebrities get wrong!
Have you ever found yourself wondering how rich celebrities end up bankrupt?
They might make a lot of money (high income), but they forget to keep track of their spending (expenditure). They spend more money than they earn, and end up having to borrow money to stay afloat.
Did you also know that people can become millionaires on a low income? These people are often called “super savers”. People who are incredible at controlling their spending can become rich because they make lots of sacrifices to avoid spending their money.
It’s all about making the most of your income and expenditure, and finding the right balance to keep as much money tucked away for yourself as possible.
If you can learn to balance your income/expenditure, it can put you on track to feeling financially safe and comfortable.
How to control your income and expenditure 📈📉
Make a budget!
Budget = a financial plan.
It doesn’t have to be fancy, it can be as simple as asking yourself these questions…
How do I make money? How much do I make? 🪙
Write down all of the ways that you make money and how much you make every month.
Maybe use online banking or try out a financial tracker app to help you track your income?
How do I spend money? How much do I spend? 💳
Write down all of the ways that you spend money and how much you spend every month. It can be very easy to underestimate how much money you spend so be as accurate as possible!
Even small purchases quickly add up.
Maybe use online banking or try out a financial tracker app to help you track your spending?
Do I bring in enough money to reach my goals? How can I increase my income? 🪜
If you think that you’re not making enough money and can make more, write down some ideas to increase your income.
Do I spend more money than I earn? Do I spend more money than I need to? How can I reduce my spending? 🛍️
If you think that you’re spending too much money and can spend less, write down some ideas to reduce your expenditure.
Do I spend a lot of money on repaying debts? How can I clear my debts? 🌪️💳
Debt is one of the trickiest types of expenditure. Having lots of debts to juggle can be one of the most difficult and stressful challenges to navigate when managing your money. It can make budgeting feel very difficult to manage and out of control.
The good news – you’re not alone and there is plenty of help available to get you in control of your debts.
- According to The Money Charity, in the UK the average household debt was £62,813 in August 2021 (including people who have borrowed money for buying a house).
- According to the Financial Conduct Authority (FCA), the fallout from Covid-19 put 1 in 4 UK adults at risk of being financially vulnerable.
- The Legatum Institute has also said that before the Covid-19 pandemic, more than one in five people in the UK (22%) lived in families in poverty. This means that 14.4 million people lived in poverty…. and that number grew with the pandemic.
With all of these money struggles in the UK, the risk of getting stuck into difficult debt increases.
So, don’t be ashamed if you need a hand with your debts. Debt advice organisations will be happy to help you!
You can get free debt help and advice in the UK from:
- Citizens Advice Bureau – https://www.citizensadvice.org.uk/ – “The Citizens Advice Bureau give people the knowledge and confidence they need to find their way forward – whoever they are, and whatever their problem. Their network of charities offers confidential advice online, over the phone, and in person, for free.”
- Stepchange – https://www.stepchange.org/ – “Contact the UK’s leading debt charity to get expert debt advice and fee-free debt management to help you tackle your debts.”
Track your money 🧐
How often do you check your bank account? 🏛️
Every month? 😬
Every week? 👍
Every day/couple of days? 🤩
The more often you check on your money, the better! 🙌
Tracking your money helps you to:
- Stick to your budget 📈
- Stay on top of your spending 🧘♀️
- Notice when someone has charged you too much 🕵️♀️
- Notice when your bank account has been hacked! 👮♀️
Make a plan for emergencies 🧯🔥
So hopefully by now you’ve got a good plan in place from your “budget”, to have lots of money left over to squirrel away every month.
But what about emergencies?
Nothing throws off a good budget like a need for emergency cash.
- Your cat gets sick and needs the vet?
- Lose your job for a few months?
- Your house gets flooded?
- Your bills increase?
Sometimes it pays to be a bit doom and gloom, and think about what kind of financial emergencies you need to be prepared for.
Saving up an emergency fund 🚒
The 3 month rule 3️⃣📆
Some financial experts recommend that you need 3 months’ worth of your typical income saved away for emergencies.
This means that if you make £2,000 a month, some experts think that you should have £6,000 saved away for emergencies. 💰
This means that if you lost your job or income, you would have 3 months to fix it before it becomes a bigger problem! 🛠️
If your job or income is less stable, you may want to consider saving more e.g. 6 months’ worth of income for peace of mind.⚖️
Did you know?
In June 2021, Yorkshire Building Society found that 1 in 5 UK adults have less than £100 in savings.
If you have less than £100 in savings, it’s a great time to start saving! 🐽
Try to commit to saving a regular amount every month for emergencies. 📆
If it’s a struggle to get money saved quickly, saving 10% of your income might be an easier start. –
If you make £2,000 a month, you could save £200 a month, and reach your £6,000 emergency savings goal in 2.5 years. 🪜
Having an emergency fund can help you to feel more prepared for the future and financially comfortable.
It could be a good idea to keep your emergency savings in an easy to access, separate savings account, to avoid accidentally spending them. 🏦💸
Considering insurance ⛑️
Getting insurance is where you pay money to “protect yourself” from different emergencies.
If you find yourself in the emergency, you will often be given emergency money to help you.
You can pay for insurance to help you in situations like:
- Your phone breaking (mobile phone insurance) 📱
- Pets getting sick (pet insurance) 🐶
- Your car getting stolen (car insurance) 🚗
- A house fire damaging your building (buildings home insurance) 🔥
- Flooding damaging your belongings at home (contents home insurance) 🚿
- Losing your income because you’ve become ill/disabled (income protection) 💼
- You or your partner passing away (life insurance) 🥀
- You getting a critical illness (critical illness cover) 🩺
- Having troubles on holiday like getting burgled (travel insurance) ✈️
If these emergencies happen you can get paid a sum of emergency money when you have insurance cover in place.
So that’s it! Hopefully these tips have helped you on your way to feeling more in control of your money. If you know any friends or family members who might benefit from these articles, feel free to share it with them!
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