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Following on from our Christmas Savings Guide we’re following up by looking ahead to 2015. Why not start off the New Year with a fresh approach to managing your finances? We’ve designed this helpful blog to offer some advice and tips which can help you better manage your budget.

There are three basic steps to creating an efficient budget:

  1. Identify how you are spending money
  2. Evaluate those expenses to see how they mesh with your financial priorities
  3. Cut or track your ongoing expenses to see that you stay within those guidelines.

If you are able to follow these steps you should be on your ways to a successful budget, but make sure you keep in mind the following:

Start with your after-tax income

Be sure to calculate your budget for your earnings after you deduct your tax and national insurance contributions. Don’t rely on variable bonuses or non guaranteed income in your budget.  By doing this you can assess exactly how much money you can rely on when budgeting, whilst also leaving room for extras if you can secure extra income.

Download a Budgeting App

There are a variety of free mobile and web apps that allow you to keep track of spending. Read some reviews and find the best one for your needs. Ensure that you use it to log purchases. Even smaller purchases add up and logging them helps you examine where your income goes. Here are some apps you can use to help you budget:

  •          Goodbudget (iPhone and Android)
  •          Toshi Finance (iPhone only)
  •          Home Budget (iPhone and Android)
  •          BudgetBrain

Create a list of Financial Priorities

Different purchases and expenditure have different levels of priority, fixing your car so that you can go to work is a bigger priority than buying tickets for a gig.  There are many financial priorities that you can plan and aim for. An example of some of these is:

  •          Being able to live within your means
  •          Decreasing your overall debt level
  •          Being able to create an emergency fund
  •          Saving towards a house
  •          Retirement Planning

Depending on your situation it is very important to follow these priorities, not spending on less important purchases or goals until your priority goals are met.

Track expenses for two months

Use a budgeting app (as suggested above) or your preferred method to keep track of your spending over a two month period.  Download your latest bank statements and review your spending. Create categories on the app or on paper and assign each purchase you’ve made to a category, for instance travel, entertainment, food and bills. Then add up the amount you’ve spent in each category, this will let you see how much of your income you spend on each category.


Once you’ve categorised your spending it’s time to be critical. At this stage it should be clear how you are spending your money and where you could potentially make savings. Set a goal to try and reduce your spending to below 90% of your income. This will allow you to begin saving towards important financial objectives or begin an emergency fund.

Revise if needed

Once you’ve finished the two months of tracking your spending, you should continue. This will allow you to monitor your expenditure and ensure your spending stays within the limits set out in the evaluation.

Be Realistic

It is important on both sides of the scale to be realistic in what you can and can’t afford in your budget. Whilst a nice holiday abroad sounds ideal, the cost behind it could implicate your financial security. Make sure you assess the overall cost of any large financial spends and prioritise the most important. It also important to factor in how much of your income you can afford to save. Whilst trying to only spend 90% of your income will allow you to make savings, if you have debt that is accruing interest it is far more important to start paying the debt down before establishing savings. Focus debts with higher rates of interest as a priority, once these are paid you can begin saving an emergency fund.

Start an Emergency Fund

If you’ve paid down or don’t have any debts, you can’t start looking to create an emergency fund. An emergency fund will provide great comfort if a disaster occurs. You should add to your emergency fund whenever you have spare income. The amount needed in an emergency fund will vary from person to person but a typical fund will be enough to cover between 3-6 months of your income. There is a massive feel good factor to seeing your savings grow. You should then find that your financial life becomes much steadier which will undoubtedly lead to a less stressful life.

 If you are struggling with debt issues, whether these are business or personal debts, The Debt Advisor Ltd which incorporates The Business Debt Advisorcan help.  There are a range of solutions available which include both formal and informal solutions such as Debt Management Plans (DMP)Individual Voluntary Arrangements (IVA),  Bankruptcy as well as solutions for Businesses.

There is also free debt help and advice available through a variety of debt charities. For more information, we recommend you visit

The Debt Advisor is regulated by The Financial Conduct Authority and is also a member of the DRF and we adhere to their codes and standards.

Call us today on 0800 0851 825 to speak with one of our advisors. If you’re calling from a mobile you can reach us on 0333 9999 600.



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