In collaboration with Save The Student.
Want to know how good you are with money? Take a peek at your bank balance at the end of the month. If you’re running on fumes, don’t know where the money went, or are side-loading debt to get by, it’s time for a re-think! “Many of my friends do ‘bank balance budgeting’,” 3rd-year student Tom reveals, “where you consider the balance (or worse, the available balance) as money available to spend”. That’s a fairly common approach to money management – but it’s all wrong.
1 Pick a destination
If you never have cash to spare at the end of the month, ending the year flush sounds as likely as Theresa May telling a knock-knock joke – but it can be done, and it’s easier than you think! Crucially, what you need first is a goal. Want to save a grand, clear credit card debt, spend summer travelling, or need a car? Find something that’s personal or important to you and it’ll be much easier to go the distance. Make it compelling, put a figure to it, and give yourself a deadline. Then work backwards and figure out how much you need to save, make or cut every month to get there.
2 Make a budget
A budget is a bit like a dashboard – it tells you what state your finances are in, and how fast your cash is moving. Start by logging your income every month (wages, Student Loan, whatever), then drill down into your spending. Include savings, bills, travel, eating out, insurance or anything else you pony up for, and track costs daily or weekly if you can.
Sticking to targets is great, but it’s not the only reason to make a budget. If you’re consistently overspending a budget will give it to you straight, making it easier to identify the habits that wreck your intentions, including emotional spending, FOMO, or ‘drunk shopping’ (yes, you know it’s a thing!).
3 Save before splurging
According to research by the Royal Mail, 6 in 10 Brits wish they’d started saving earlier (ideally at 16) – and for good reason. The earlier you start, the less work it is: you can put less away each time and still build a hefty sum. Start by picking a fixed amount you can afford, and challenge yourself to pay it into savings every month without fail.
Savvy saver Tom adds: “All of my savings have come from extra work I've done but didn't have to do, and then didn't let myself spend the money. Now it's there, I don't have to worry about not being able to pay for things, as I can call on my own buffer to help out with cash flow.”
Unless you’re paying off debt, it makes sense to build savings ahead of spending. And, when money’s tight, a budget can pinpoint where to cut back, from walking instead of driving, to ditching your TV licence. Ultimately, it comes down to balancing what you want against what you can do without.
4 Get real about income
At some point, you’re probably going to find what you have coming in isn’t enough to pay your way. The obvious choice is to spend less, but if you’re already cutting things finger than John McClane on the top of the Nakatomi building, you need more income. If you’re worth a promotion or a fatter pay cheque, make this the year you ask for it. Find out about benefits or, if you’re a student, any support funds going – or start a business and side hustle your way to more money.
5 Don’t be loyal
Shopping around for cheaper deals on household bills is as much fun as that joke Teresa started in point 1. Stick with it, though, because slicing down household costs is hands-down your biggest money saver. Make a list of your monthly outgoings, from utilities right down to your film streaming service, and stick a reminder in your phone calendar about a month before they renew. Then tell your provider you’re off if they don’t match your cheapest offer.
6 Use everyday investing
Investing isn’t just about stocks and shares – think of it more as a way of increasing a pot of money for the least amount of effort and risk. Snapping up Pokemon cards and selling them for a profit later on? That counts – and collecting things is an easy way to get started: new edition or rare coins and bank notes, books, toys and DVDs; even designer clothes or furniture can turn out to be a goldmine. Investing in companies is much easier than it used to be (there are even apps that will invest your spare change for you) but you don’t have to go full Wolf of Wall Street to have a go.
There’s nothing here that isn’t common sense – but that’s the beauty of it! Ending the year with substantially more cash just takes practice and patience. Once you’ve adopted the tips above, there’s no end of ways to boost your fortunes. Start as you mean to go on!
Guest article written by Ruth Bushi, an editor at Save the Student – the UK's largest student money advice site.