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What are the best ways to budget?

Keeping on top of your finances and budgeting plays a huge role in your everyday life and paves the way for your financial wellbeing. In this blog we talk about the best ways to budget and how to get the most out of your savings. To find out more, keep on reading…

Setting money saving goals

The first step to getting on top of your budgeting is to assess your finances and see how much you can comfortably afford to save and budget for. For more help and advice on setting healthy money habits click here.

Setting yourself a variety of money saving goals is a great way for you to ensure you are on track with your savings and allows you to keep motivated with your budgeting limits. We recommend setting smaller saving goals such as a weekend away fund or putting money aside to redecorate a room within your home alongside larger, long period saving goals such as a deposit on your new home.

Creating an emergency fund

Ever heard of the term ‘saving money for a rainy day’? This is exactly what we mean! You need to be able to set some money aside each month to put towards your emergency fund so that you know you are covered in case anything bad does happen. Unfortunately, life can be unpredictable and emergencies can happen every now and again from home damages to work uncertainty so it’s important to ensure you have money set aside dedicated to being able to cover you during these times. This allows you to continue saving money for the good things like that dream holiday or your new home fund without having to erase all of your hard work.

Each month, factor into your saving budget a small amount of money that you can set aside from your regular savings into your emergency fund. Even if this £50 a month, this will quickly add up to give you that extra level of financial security. 

Creating sinking funds

What is a sinking fund? A sinking fund is a saving pot for regular events that pop up throughout the year such as Christmas or your friend's birthdays. This allows you to plan ahead and have a comfortable pot of money set aside to prevent you from dipping into your main savings account when going through these expensive periods.

We recommend sitting down at the start of the year and making a list of any events that you know are coming up within the next 12 months to allow yourself to be one step ahead and plan accordingly.

Review and Adjust

It’s important to regularly review your budgeting and your saving to make sure that you are still comfortable and on the right tracks. Budgeting isn’t a one size fits all situation and finances can often change so don’t forget to keep checking in to allow yourself to adjust to your budgeting goals and routine if needed.

In conclusion, mastering your finances through effective budgeting is a continuous process that requires commitment and flexibility. By setting diverse goals, establishing emergency funds, creating sinking funds, and consistently reviewing your financial plan, you'll be well on your way to achieving financial stability and realising your long-term aspirations.