Tips for UK millennials
A budget for UK millennials? Is it essential?
Yes, proper budgeting can (pardon the pun) pay off. You shall be able to see just where your money is going. It might even be possible to start saving for that bucket list-holiday. The more you budget, the more fun you can have!
In this blog, we’ll tell you how to budget in the UK and how to start a money management system.
Some advantages of having a budget in the UK:
- If you have a budget, you’ll find it easier to identify where you can save some money
- You will have the freedom to do the things you really love because you planned for it
- Mortgage- or loan officers like budgets
- You will be less likely to end up in debt
- You can prepare for the unexpected and won’t be caught out in the cold
See more advantages here:
How to budget in the UK
To get started
It is easy to get started. The first thing you need to do is to get an idea of how you are currently spending your money. Look at your bank accounts and at the bills you have.
You need to make a list of all your household spending, grocery bills, your living costs, travel expenses, how much you go out to eat, and how much you spend on your sport or holidays.
What financial products do you currently pay for? This covers things like insurance, a policy on your life, and investments. You need to know what is coming in, but also what is going out.
A spending diary
Some people start their money management journey a bit slower. They start a spending diary and write down everything they buy and pay for in a month.
You’ll have to write down absolutely everything you spent for this to be effective. Remember, small purchases such as bottled water, magazines, and other treats can all add up significantly over a month.
Does the idea of a spending diary sound interesting? Read more here:
Forms of income in money management
Secondly, you’ll have to see what is coming in every month.
What is your salary or pay every month? Be sure to note down how much is left over after the Taxman received his bit.
Are you a student? Divide your student loan into monthly parts. Perhaps you will be able to manage your money more wisely if you have part-time income, too.
If you receive any additional benefits or income, note that down too.
Consider how you can earn some extra money. A simple Google search can give you loads of ideas.
How to supplement your current income:
Budgeting is when you subtract your money spent from your income. What is left over is what you get to play with!
Money management for everyone
It will be easier to budget in the UK if everyone in your family is involved. Now is the time to start managing your money wisely.
A shared goal is attained easier! Allocate spending money to each member of the household and plan your saving goals.
Try to cut on some of your household bills.
Once you’ve got all your information together, it is time to see how you can save on individual items. That’s money management at its best!
- Reduce your phone bill and Wi-Fi broadband service. Call your service provider and negotiate a better deal.
- Save on water. Shower instead of taking baths. Switch to more efficient showerheads. A little can go a long way here.
- You might be paying too much in council tax.
- Shop around for the best deals on groceries.
- Pay your bills on time. Late payment fees are not worth it. You can instead save that money!
Loans and credit cards
Part of how to manage your money more wisely is to know of the high-interest rates of credit cards and loans. Pay off those debts and do so quickly!
Perpetrators are credit cards (the average interest rate is 20% on your hard-earned money), store cards and personal loans.
Compare interest rates on UK credit cards here:
Make it a personal goal to focus on your highest debt first and pay it off as soon as possible. (Remember, you must still pay the minimum amount on all other credit cards or loans.)
The money you save here can be utilized elsewhere in your UK budget.
Other priority debts may include rent, mortgage, council tax, or child support. Should you fall behind, it can cost you a lot of money. Rather try and get help instead of ignoring the problem.
Don’t ignore demands for payments. It won’t make the problem go away. In fact, it can only get worse. Open those demand letters, sit down and formulate a plan. If you feel overwhelmed, help is available.
Consider other alternatives when you need money quick. Perhaps a family member can help, or you can consider joining a credit union.
A savings goal in a budget for UK millennials
It can be hard to motivate yourself to start saving. Setting goals makes it a bit easier.
Saving for a rainy day
Part of how to budget in the UK should be to have emergency savings. Some people feel it is much too daunting to save up three months’ worth of expense.
Remember, though, Rome was not built in one day! An emergency fund is something to aim for. It does not matter if it takes you five years to get there; what matters is instead that you’ve made a start. Put something away in a savings account every month.
More saving goals
- Wouldn’t it be great to go on a holiday and have the money in your pocket before you leave? No more worrying about the bills when you get back.
- Another saving goal might be to buy a car outright or save for a child’s education.
- Put more money away for retirement.
- Be able to invest.
Here’s a handy article from Barclays about how to set saving goals according to your age:
Some more budgeting tips for UK millennials
Are you receiving all the benefits that you are entitled to?
In the UK, there are a host of benefits you may be entitled to that can supplement your income.
Here is a short list:
- You can get help paying for a funeral
- You can get support for your mortgage interest benefit (SMI) if the going gets tough. It is a loan, however, and must be paid back.
- Housing benefits are available
- You can get a grant for ‘going green’ and for being more energy efficient
- There are retirement benefits, benefits for pregnant mothers, or benefits that apply to school-age children.
It is never too late to start to learn how to manage your money wisely. Budgeting is the best way to get there. Follow our budget tips for UK millennials, and you’ll see.
Follow these links to some UK budget planner apps that can help you: