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Sometimes it can be hard to make the pounds stretch from one payday to the next. It only takes one unexpected expense to throw a budget off track and leave you depending on credit cards or loans.
Here are some ways you can help yourself get through from payday to payday without landing in the red.
1.Set a daily budget
Work out what is left after bills and direct debits have been paid, like your mortgage, energy and phone bills, but also any other regular payments, such as Netflix or newspaper subscriptions, then divide this amount by the number of days until your next payday to create a daily budget. In reality, there will be some days when you can spend less than this budget, and some days when you need to spend more. Some of the new digital banks such as Loot and Starling can help you with budgeting as you can set a daily spending cap on your card and receive instant notifications on your smartphone when you have spent something.
Write a list of all the things you expect you will need to pay for in the month over and above your usual spending. This will include things like birthday gifts, car services, haircuts, meals out.
3.Try to save an emergency fund
Property experts reckon homeowners need 1 per cent of their home value (£2,158 for a typical home) saved up each year for repair work and maintenance. You should also expect to shell out for the odd broken big ticket item in a year. Consistently saving up any surplus into an account purely for emergency spending will help you avoid having to take out finance or buy large items on credit.
4.Hunt for the cheapest petrol
Cars can be a significant outgoing. If you need to fill up, Petrolprices.com is a website that finds the cheapest fuel near your postcode. If you really don’t have the cash for a full tank, would taking the bus, cycling or walking save you a bit of cash for a few days?
5.Sell stuff you don’t want
If you are half way through the month and things are looking bleak, consider whether there is anything you can sell on eBay or Gumtree. eBay reckons the average household has £4,000 worth of unwanted good lying around. This has the added bonus of decluttering your home!
6.Have a “store cupboard and freezer week”
The Love Food, Hate Waste campaign reckons the average household can save £60 a month through better management of food waste. With a few carefully chosen fresh fruit and vegetables items (bought individually rather than in a pack) and a store cupboard of rice, pasta, flour, dried herbs and flavourings, you’d be amazed at what you can rustle up – and the amount you can save on a weekly shop by avoiding fresh, ready-made packaged food.
7.Have you overpaid on your energy bills?
Millions of people pay a fixed monthly amount for their gas and electricity. Often, this can result in a surplus of hundreds of pounds over a year. Check your last statement to see if you are in credit and if you are, contact your supplier to ask for some of this money back.
8.Alter payment dates
If you regularly end up in your overdraft, paying hefty interest charges at the end of each month, it might be a good idea to shift some of your biggest direct debits to the end of the month (just before your next payday) rather than the beginning (just after your payday). That’s because this will mean your account is better funded throughout the month, reducing any interest charges you will have to pay as well as the risk of incurring any unauthorised overdraft fees. The danger with this approach is that if you overspend during the month, you won’t have enough left to cover your big bills, such as your mortgage, by the end. Careful budgeting is important if you try this method of managing your interest and charges.
9.Get the best deals for credit and borrowing
Finally, if you are out of options on the budgeting, spending and saving and have no choice but to resort to credit cards or other borrowing, ensure you are on the lowest rate deal, 0% if possible. If using your credit card for spending, make sure the 0% deal applies to purchases or if transferring to your current account, it should apply to money transfers. Make sure you note down the end date of any 0% deal period, when the rate will revert to a much higher APR and start costing you significantly.