The true secret of the financially secure is that they know to the penny what is coming in, what is going out, and what is available... otherwise known as being in control of your budget.

Unlike the Chancellor of the Exchequer, most of us can easily get a grip on our finances, it just takes bravery and consistency!

Here's our top tips for successful budgeting

1. Sort out a realistic budget, not a fantasy-how-you-wish-it-were budget. Keep your budget trimmed to the bone by making sure there is no funds ‘leaking’ from your account, say for direct debits you forgot to cancel or services you no longer use. If you bank online you can check and delete these yourself, otherwise contact your bank for a list. Be ruthless.

2. Trim your budget by minimising the money you spend on necessities and essentials, such as utilities, cars, holidays, and food. Websites such as www.uswitch.com and www.martinsmoneytips.com are a rich source of cost cutting advice, and have a look at our Trim Your Spending article for further ideas.

3. Increase your income. Consider changing jobs, taking an additional job, or starting a second income strand - home businesses can be an easily set up and profitable way of making extra money without incurring huge costs. Perhaps rent out a room, either to a permanent lodger, or to visitors to your area as a B&B option (contact your local Tourist Board), or as a host family to foreign exchange students – see www.oise.com for more details of language schools in your area.

If you need to work round the kids or want to do it from home, then www.ebay.com and www.amazon.com offer convenient and global marketplaces, while home-working websites (such as us!) are a rich source of advice and information, and can help you get started quicker and easier.

If you have a lot of specialist equipment gathering dust, then websites such as www.thehirehub.co.uk offer you a chance to make money out of renting it out to someone else for a short period.

4. Work your budget for three months, and then review it. If it isn’t working, review the above points and see where you can rejig things. Find the hidden costs and see where you can save or make extra money. Once you have it working, stick to it, with regular financial checks (say, six-monthly) booked in your diary. Use every spare penny you have to service any outstanding high-interest debt BEFORE you start saving.

5. Once you start to have surplus money in the bank, don’t stop having debt (paying off your mortgage in total is not a good idea, for example, as it’ll reduce your credit rating in the longterm), just make sure you are getting the best interest rate you can. This will become much easier as your credit rating improves and good sources of advice can be found at www.motleyfool.co.uk and www.moneysavingexpert.com, as already mentioned. Then start saving seriously, making sure you are getting as much tax-free as possible by utilising your allowances to the maximum. Also think about offshore or euro accounts (see www.moneyfacts.co.uk).

6. Invest for the future. Start to make your capital earn you more money, perhaps by investing in property or buying and selling shares (get some professional advice beforehand, though - www.motleyfool.co.uk is a good place to start). You might also consider becoming a ‘Business Angel’, someone who invests in fledgling companies (think ‘Dragon’s Den’, but privately). Or consider investing it other people on a smaller scale via personal loan sites such as www.zopa.com, which offers a way for you to earn higher rates of interest than you can get from a savings account by enabling you to lend your capital to someone else.

 

© Claire Burdett. No content to be reproduced without written approval of the author.

Claire Burdett is the Founder and Director of Funky Angel. She is a Writer, Journalist, and Editor, Integrated Marketing Expert, and Home Business Mentor.

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