budgeting Archives - Page 3 of 4

You only have to turn on the news or your computer nowadays to hear about how prices are rising yet incomes are falling, especially in the case of redundancies and similar. If the UK economic crisis of the past few years has taught Brits anything it is the importance of living within a budget and keeping a handle on our personal finances.

Working out a budget is important. It is easy to see how so many people have found themselves deep in debt and unable to climb out as paying for items on credit always catches up, particularly when you consider the interest rates that are being paid. The only way to avoid this type of hardship is to ensure that you avoid credit where you can, budgeting an amount for items you want or need to have.

The key to an effective budget is working out a realistic budget. A spread sheet that shows income in and bills and food out is not going to work for very long. Within your budget you need to account for things like birthdays, holidays and entertainment. Clothing and footwear needs to be included as does money put aside for emergencies. When setting yourself a long term budget you need to look realistically at what you do spend and what you need to spend or put away each month. For example, putting away a monthly payment towards the next car tax disc so that when the bill comes in you have funds ready to cover them is much more organised than having to pay on a credit card as you don’t have an extra couple of hundred pounds spare in your wages (chances in Car Tax mean that motorist will soon be able to opt for a monthly direct debit to pay for their car / road tax).

Cutting your excess spending is the first step to reducing your outgoings and putting together a budget that is easier to stick to. Consider for example whether you need Sky with all of the extras. Reducing your packages for entertainment for example doesn’t mean stopping them altogether but cuts the cost and an extra £20 a month might be used for the MOT bill or Christmas budget.

Keeping an eye on your finances is an important part of living within a budget. Using a spending diary or keeping an eye on spending via online banking will help you to ensure that you are not overspending. Similarly, try and use cash more when out and about. It is a lot harder to hand over a crisp £10 note from the cashpoint for a frivolous magazine and takeaway coffee than it is to simply enter your chip and pin code and use “unseen” money. Using cash helps you to keep an eye on what you spend and similarly discourages unnecessary spending.

Cutting the cost of all of your purchases will help you to keep within budget and still enjoy the food, entertainment items and more. Shopping online for many items does work out significantly cheaper, especially as you are able to compare prices and deals with ease. When shopping online you have to again think twice about the amount you are paying as you fill in all of your delivery and cash card details and this is not necessarily a bad thing. For those must-have or really-want items search reputable sites for discount codes and free delivery offers to again shave pounds off.

It really is easier than you think to get a handle on your personal finances, cutting your outgoings and living within your means if you do a small amount of planning and assess and alter your spending habits.

I posted previously about how the lovelies from Moneysupermarket had offered to send me a pre-paid Mastercard topped up with £100 to use for what I wanted, as long as everything I bought was under RRP. Obviously I wasn’t going to say no!
I decided to use the funds as my budget for tarting up my living room and my mission is complete. Not only do I have some lovely new and shiny items in my living room but I also have first hand experience of using one of these cards.

The card I was sent was a Freedom Prepaid Mastercard.

About pre-paid cards.
Despite coming from Mastercard and similar companies, these cards have no credit facility and are not linked to your bank account. They are a card that can be topped up online, via bank transfer, at the Post Office and at selected Pay Points.

Where can you use pre-paid cards?
You can use these cards pretty much anywhere you would use a normal debit card. You get your own pin number for use in shops, and the cards have the same information as you would find on a bank card so can be used online. I even added my card to eBay and used it without any problems.
You can also withdraw cash from your card at any ATM using your pin number.

Fees
There are many prepaid cards on the market and they all have different fees.

For the purpose of this campaign I chose the Pay As You Go option. Clearly if you use a card regularly for multiple purchases it is better to pay a monthly fee but for a situation like this, where you are setting a budget to do something i.e. a project or perhaps Xmas shopping, the PAYG option is probably best.

Ease of Use
I found the card very easy to use. The only issue I had was with one retailer where the name and billing address didn’t quite add up but I can’t blame the retailer or the card for this in truth, it was a circumstance of having a card registered by someone else and sent out rather than getting my own and registering it in my name. The one thing that is worth mentioning is that when this retailer put the transaction through again I was charged an additional transaction fee.

How can you keep track of what you have spent?
It is easy to check your ongoing balance online. I found that the balance was updated pretty much instantly after anything was spent and it didn’t take long for an itemised summary of what I’d spent, where and any transaction fees to be updated.

Are they worth using?
I would say absolutely yes. I am something of an interior design tart and find it easy to get carried away with beautiful things. Having my budget separate to my own account meant that I was much more careful with the spending, more aware of what I had spent and couldn’t “accidentally” go over budget. For a project such as a room makeover, new clothes, Christmas shopping and in fact anything that you want to budget for and not be able to easily dip into the savings or bank account (like many can do when putting money aside in an account) it is an ideal solution.

And the makeover?
You’ll have to wait until I have everything properly put together and tarted up to see it all so you can look forward to another interior design post but from my £100 I managed to get new curtains (thanks to CB Furnishings, Thirsk), 6 gorgeous coordinating cushions (From TerryFabrics who I have to say have fantastic customer service skills) and a lovely print from Unique Home Designs Framestore’s Ebay shop. All were very easy to deal with, provided great service and had items under RRP (or Best Price on eBay) so fitted in perfectly with this budget challenge.

Thanks to Moneysupermarket for asking me to run this mini-makeover challenge. Not only have I had enormous fun, I have learnt a lot.

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Showing all posts tagged budgeting

Reorganising Your Personal Finances and Budgeting Better

Using pre-paid debit cards for budgeting