By Jessie Shier
Financial management advice for people wishing to take these basic steps alone, especially for the first time.
It’s useful to have a bank account to organise your income and outgoings and bill payments. This bank account should be in just your own name. So only you have access to it. This gives you control over your money and gives you a feeling of confidence and being in control.
Write a list of all your income sources and amounts, and all your outgoing payments and amounts.
Add up and write down how much income you have as a whole and again how much your outgoings are as a whole and deduct the outgoings from the income. This is to make sure that you have enough money to cover living expenses.
If this falls short, take a look and see if there is something in the outgoings that you don’t need right now. Try to balance the amounts so that you have more income than outgoings, even by a small bit.
Then make a full and tidy list of all your income sources and amounts, and then underneath that, a full, neat list of all outgoings and the amounts they need every month or every week (however is easier for you).
That little part of your income is now labeled as each outgoing.
Once all what you consider vital utilities have been allocated, then add in food cost, and whatever else you need.
Try to be realistic about the cost and if there isn’t enough money, see what can be reduced.
Label the part of the income to cover food and whatever else you need.
Now that your income is segregated into labels, you know that everything that you need is going to be paid for. Now you can feel more in control and more confident.
If there is any money left, this can be used however you choose. If there isn’t, don’t worry! It happens to a lot of us! The important thing is that you are on top of your own finances, and that is quite an achievement!
Now you need to organise the bill payments on a regular basis. Some people will pay in person, but a common way these days is to use direct debit, or standing order for payments.
The meanings of these terms can be found here: https://gocardless.com/guides/intro-to-direct-debit/standing-order/
You will need to organise setting up these payments with your bank account provider and the company you are paying. You will also need to organise having your income sources all going into your bank account. You can arrange to have it paid straight in to your account, or you can pay it in by yourself. If you pay it in by yourself, set aside a regular day each month or week to do this, so that there is money available at least 3 or 4 days before the bill it is meant to pay. This is because it takes 3 or 4 days for the bank to process a payment. Check that there will be enough money in the bank to pay each bill in time. Use your lists to organise this.
If you choose to pay in person, follow the same procedure, but physically separating the money into its constituent amounts and setting it aside in a secure place.
Once this is done, you can sit back, because with your income going in and all the payments set up, everything should be in order.
Since you have allocated and labeled each part of your income to cover each outgoing, you know how much is left for you to spend at will, if any. And you know how much you have allocated for food, etc.
So when you go shopping or buy, keep an eye on the cost of items to ensure it stays within your allocated limit, and this will help ensure that you don’t over-spend.
Segmenting and labeling your income in this way is a powerful psychological tool to help you manage your finances well. And helps you to not be tempted to spend on unnecessary items.
It is important to keep looking at the prices of the items you buy to ensure they do not increase over your budget.
If you use card or Apple Pay, you need especially to keep an eye on the amounts you are spending.
As you grow in confidence, your ability to manage will increase, and you will be able to plan further ahead.
At the beginning it is important to manage what you’ve got by allocating and labeling each part of the money for each payment. And therefore knowing exactly how much you can spend.
Give yourself time like this.
If unexpected expenses occur, don’t worry. Take a look through your list and see what can be adjusted temporarily. Talk to providers and try to negotiate easier payments. Finances often experience ups and downs; it doesn’t mean you have failed. It is often possible to make arrangements with utility providers/companies if you have difficulty meeting payments. The important thing is communication.
Whatever your income level or source, you can enjoy the feeling of being in control of your own finances, by this simple management technique.