Five steps to getting financially fit
It’s January and many of us will have made resolutions to get our finances in shape after overindulging during the annual Christmas spending spree. So if you want to trim some fat from your household budget, follow our five steps below.
Step 1: Make a budget
When working out your budget, look at the money you have coming in and going out across a period of time such as a week, month or year. Taking the time to look at how you spend your money will put you in a good position to make realistic changes and better manage your finances. If you choose to do your budget over a year you should include your salary and, if you have a partner, their salary, social welfare allowances and any other income you might have. Work out your outgoings, such as your mortgage or rent payments, heating, house, life and car insurance, electricity, phone, transport, grocery costs etc.
Step 2: Keep a spending diary
Use our spending diary to help you work out the cost of everyday outgoings such as buying lunch or a coffee. You will then see what you spend your money on each day. Track your spending for a month and keep receipts, entering the costs into your weekly spending diary. It might be easier than you think to make some small changes, which can add up to big savings.
Step 3: Don’t forget the extras
Include any extra expenses such as additional activities and occasional costs such as birthdays, holidays or memberships. Don’t forget to include any loan repayments under your outgoings - it’s important to write down how much you still owe on your loans, how long more it will take to repay them and the cost of paying back the loan, including interest and additional charges.
Step 4: Does your budget balance?
Compare your income and outgoings. This will help you see if you’re spending more than you’re earning. Take a look at each expense to see where you can cut down. If you find it hard to make savings, check out our money saving tips.
Step 5: Small changes make cents
If you are struggling to cut costs, use our spending calculator to see where you could start saving money on your everyday expenses. The calculator works out how much you are spending on everyday items such as lunches, magazines, cigarettes or the occasional bottle of wine and, more importantly, it shows you how much you are spending on these items monthly and yearly. It also shows you how much extra you could have in your pocket if you reduced your spending in some areas. For example, if you spend an average of €25 a week on entertainment, this adds up to €1,300 a year, so managing how much you spend on even the small things can make a big difference.
Published Date: 11/01/2017