7 Tricks for Making the Best Budget

Financial caution, budget development, monetary balancing, savings growth and more. These terms sound scary, don’t they? Making a budget, especially if it is for the first time, can appear to be an extremely daunting and challenging task.

The truth is that it sounds more terrifying than it actually is. The best way to handle this so-called stressful task is to firstly realize that it is not that at all! Simplify it by comprehending what the essence of a budget is. Primarily, it is a written down plan of your funds and how it will be managed.

You are the one in control, the one making decisions and the one to make any final calls on its allocation. Hence, there is nothing to be scared off! Isn’t that great? Now to make you feel at ease even more, let us share with you 8 wonderful tricks that will help you in designing your budget.

  1. Make Your Favorite Tea

You must be wondering why the numero uno tip is to make a cup of your favorite tea. The reason is that the most important stage in crafting your budget is to make sure that you are in the right frame of mind. Being calm and mentally at peace is strategic in creating a realistic and an efficient economic strategy.

So, put the kettle on and boil some water. Take out that colourful mug that your niece or grandma gave you and pour some tea in it. We recommend chamomile or green tea as it helps you to relax and perhaps smile a bit even. Switch on some soothing music to help you concentrate and gather your supplies. Take out some vibrant highlighters or pencils along with a pad of paper. Or if you are tech-savvy and prefer a more automated way, then feel free to tap into the magic of Excel or any other spreadsheet program.

  1. Soul-Searching Time

Now that the ambiance has been set, reach into the deepest corners of your soul and think. Think why you are making this budget and figure out what your source of motivation is. What is it that drives you to be undertaking this action? Getting to the root cause will help you stick to your budget in the long term. Are the indigo waters of the Mediterranean Sea calling out your name in Santorini, Greece? Is it desire in owning a new home? Or building a pool of funds to pay for that Ferrari once you retire? Or are you trying to become debt free?

Identify and establish both long term and short term goals. This way, you will be motivated to set a small sum aside accordingly. Short term goals can include saving up for a new car, a vacation or a down payment on a property. Long term goals would include retirement, college funds for your children or capital to launch a new business. To achieve these objectives, you may have to compromise on certain activities such as not watch the latest Marvel superhero movie on Imax or try out that new Italian restaurant that all your friends are recommending. Knowing what you are striving to accomplish will make you feel stronger and more dedicated in your journey.

  1. Take Away Income

One of the most common mistakes that people make in budget planning is to not take into account what their after tax income is. It is imperative to fabricate a budget based on the disposable income that you actually come home with. Take your after tax, annual income and divide it into twelve parts to understand the number you receive at the end of every working month. This is the benchmark against which you will design your budget around.

  1. Truthful Patterns

Be honest with yourself when you are tracking your expenses and figuring out how much you spend on different categories: food, recreational activities, rent, insurance, transport etc. Take out receipts from the past couple of months or review your banking transactions to identify your spending patterns. This is a crucial step in understanding the volume of outflows and corresponding inflows. By doing this, you will be able to comprehend which areas you can reduce spending in order to save or to simply attain your desired budget outcome. This should also reflect infrequent expenses that may occur on a seasonal or quarterly basis. These can vary and include property taxes, vehicle insurance or homeowners’ insurance.

  1. Debt Freedom

It would be a perfect, utopian realm if we were able to exist without any format of debt in this day and age. Unfortunately, we all built up a little debt over the years. However, the secret is to balance it out and ensure it is not going out of control. Contact your bank and set up an automatic debit transfer of a certain amount to pay off whatever entity you owe. Whether it is a credit card or a personal loan, returning a specific amount every month will eventually win you your freedom.

  1. Separation of Accounts

If you find monitoring your financials complex if it is present only in one account, then open up others with specific purposes. Tap into a savings account and deposit your intended amount in. This way you will know not to touch that money until you attain your fiscal goal. A checking account will help you track your fixed outflows. Either utilize the same checking amount for your daily spending money or open another. Depending on your level of comfort and confidence, you can manage your accounts accordingly.

  1. Realistic Expectations

Ever gone on an extreme, fad diet with the hopes to lose 15 kg in less than a month? It must have involved you going to hardcore lengths and cutting back calories. It may work for you for the first couple of weeks, but then you will find it hard to stick to it. Losing weight is easy, maintaining is the challenge as you have to live by healthier choices. The same principle applies to budgeting.

Don’t cut back on recreational spending 75% suddenly. Take it slow and ease yourself and your partner into it. Measure what amount of your money goes into entertainment (with a time base of 2-3 months) and promise yourself that you will bring it down by ten percent or so. This way, you still save more and get to enjoy your life as well. It will gradually build your courage and enable you to stick to your budget.

10 Awesome Ways To Save Money

Is the aroma of beef steak lingering in the air and enticing you as you walk by your favourite restaurant? Is that black, sultry dress calling out your name as you stroll by a clothing chain that you love? Or is that sparkly new diamond necklace looking extra shiny in the jeweller’s window? If the answer to the above questions is yes, then do not worry. We have walked in your very shoes and can relate to the temptation that you are attempting to avoid.

After all, it takes a lot of willpower to just keep on walking and ignore the call of the consumeristic devil. Not everyone will have the same level of strength and be able to resist it. That is why we are here to guide you and offer a few tips that we have gathered over the passage of time.

  1. Record Your Expenditures

If you are not sure what your monthly budget should be-start out by recording all your transactions. Once you have gained an insight into the number of fiscal inflows and outflows that your lifestyle requires, you can take a step back and start reviewing what can be reduced. Not only this, it will serve as a clear snapshot of your spending cycle and demonstrate in a glance where the major amount of your expenses is going. Be it a coffee, a snack, a bottle of water or even a pack of chewing gum-note it down in your diary. This should allow you to count every penny that is being spent. To get a broader picture, classify your data by items such as mortgage, recreational activities, medical or groceries.

  1. Make a Weekly Menu

We all love to eat out and relish the exquisite taste of that burger at the joint by our office. Its just a few extra dollars, so shouldn’t really matter. Guess what, every penny counts. Those twenty-dollar burgers once a week could potentially save you a thousand dollars annually. Just do the math! Mind-boggling, isn’t it?

Dedicate a few hours every week to design your weekly menu-food that you will cook yourself at home. Then, go grocery shopping over the weekend and spend a couple of hours prepping meals for the week. Knowing you have food waiting at home will encourage you to eat that only. Dining out is usually the biggest chunk of financial expenses in a household. So not only will you manage to save money, but calories as well as it is a much healthier alternative.

  1. Plan A Budget

This can stem from your recorded transactions as you will have a picture of what your expenses entail. Decide what percentage of your regular income you would like to save. Try to keep it a realistic figure so you do not get demotivated or disheartened if the numbers do not match up at the end of the month. Make sure you account for seasonal costs that do not occur on a frequent basis, for example, car servicing. When you plan for such charges            in advance, it helps you to organize your other outlays in an efficient manner.

  1. Save for That Big Holiday

Setting short term goals is an extremely effectual method to roll in the dough. It can be anything that your heart desire and can range from a summer holiday to a down payment for your first home. Estimate the length of time you will require to build up a pool of funds large enough to achieve your objective.

  1. Automate Your Savings

We live in a world where we are at the prime of technology. As a society, we are experiencing continuous innovation where advances in communication are made daily. Utilize this and enjoy the benefit of having your bank transfer a certain amount of money monthly and transfer it to your savings account. Most financial establishments offer this facility and you can avail it. Direct money transfer serves as a means to spend less overall and teaches you to live in the amount allocated.

  1. Track Your Growth

It helps if you are monitoring your savings account and ascertaining whether you are closer to reaching your target. Do this every month to observe the status of your progress and make any adjustments if required.

  1. Pick Your Priority

It is quite encouraging when you begin to see your saving pool grow. Do not forget your long term goals whilst striving to achieve your short term ones. It is imperative to remember that retirement is a reality that you should try to prepare for. Starting at a younger age will allow you to spread your numbers at a lower rate.

  1. Put it in the Bank

Received a nice, generous bonus from your company for those extra sales targets you achieved? Or is a nice birthday check coming your way from your magnanimous uncle? Do not blow it all on a beach vacation or on the latest Iphone. Reserve a reasonable chunk of it and deposit it in your savings account. Do this immediately so you are not tempted to spend it.

  1. Take Coffee From Home

As much fun as it is to go for a coffee with your colleague in the morning and then again once more after lunch, it makes a bit of a dent in the wallet over time. Imagine if you saved those $10 a day, that is $200-$300 saved a month. Start out slowly and commence your saving journey in this aspect by taking coffee from home at least 3 times a week. Feel free to invest in a few different brands and categories of coffee as it is still going to be cheaper than getting it from a coffee house.

  1. Work, Work and Work

We do believe in a strong work -life balance. However, it is true that if you work more, you will be too busy to think about spending money: be it going out for a movie or a meal.

,

What have we learnt about Finance from Christmas 2018?

Christmas is an expensive time. It is estimated that the average family spends £800 on festivities every year. Many even risk getting into a serious debt problem to enjoy the Season. While this is extremely stressful for many people, all this spending results in a lot of interesting data that reveals a lot about our priorities, our spending habits, stable investing opportunities, best sales practice, and, even, the economy.

Continued Online Dominance

Unsurprisingly, as in previous years, more people turned to ordering online to source their Christmas necessities than ever before. The store Next, for example, reported a 13.6% rise in their online sales in the 54 days before the 24th December.

This demonstrates the preference for convenience, and the improvements that continue to be made with deliveries. As Natalie Berg, global research director of Planet Retail, notes:

‘In retail, time wars are becoming the new price wars. A few years ago, three to four days was acceptable, but today same-day delivery is becoming the norm’.

As such, Argos was noted to have promised that customers who placed an order by 1pm on Christmas Eve would have it delivered by 6pm on that same day.

Shopping as an Experience

Despite increasing numbers of people choosing to do their Christmas shopping online, Network Rail has reported an increase in retail sales around the Christmas period. Interestingly, the stations with the greatest profit are all in London, which is often more likely to experience a mass exodus around this time, as people leave to visit family elsewhere. Paddington Station had the greatest increase at 42%, while Euston and Kings Cross experienced an increase of 12%.

As such, it is possible that this uptake in train station use at London demonstrates an enduring love with the experience of shopping, and other Christmas experiences. Visiting attractions, such as Winter Wonderland in Hyde Park, and going shopping of Oxford Street, continue to be enjoyable Christmas experiences, regardless of the convenience of internet shopping.

Success Stories and Cautionary Tales

There are all sorts of ‘winners’ and ‘losers’ out of the major shopping competitors over the Christmas period. This Christmas, Tesco’s can be considered a key winner as their seasonal sales were up 1.9%, with their food sales dominating at a growth of 3.4%.

John Lewis, another winner, saw a 3.1% sales hike over 6 weeks over the Christmas period, and partner Waitrose saw a hike of 1.5%.

The greatest winner, however, was Lidl, who saw an impressive leap of 16% in their sales over December. This clearly demonstrates a move towards value supermarkets, as wage concerns, inflation, and other financial concerns dominate consumer interests.

More telling, however, is the supermarket deemed the ‘loser’ of Christmas 2018: Marks and Spencer. They experienced a 2.8% drop in like for like clothing and home sales over 13 weeks, while their food sales were down 0.4%.

Similarly, Debenhams experienced a 2.6% drop, and House of Fraser experienced a 2.9% decrease. The struggling nature of ‘upper mid-range’ shops might demonstrate that there is not only increasing financial pressure, but also a growing inequality as the majority of people fall into two extremes: Waitrose, or Lidl.

Quality Food

Another enduring love, is that of food. While it is clear that consumers are not necessarily prepared to switch to a more up-market supermarket for their Christmas food, perhaps as they are managing debt or struggling with inflation, as shown by the persisting love of Lidl and Tesco’s, it is clear that consumers still want quality for Christmas.

As such, sales in premium food lines grew this Christmas. Morrison’s ‘The Best’ line, for example saw their sales increase by 25%, and Tesco’s similarly acknowledge that its record sales during the four weeks before 25th December were significantly due to increases in sales in their ‘Tesco’s Finest’ range.

Bryan Roberts, an insight director at TCC Global, noted:

‘What’s interesting is that instead of trading up to a premium supermarket like Waitrose or Marks & Spencer, people have been trading up within the normal retailers they shop at and just buying more premium products’

Dubious Discounts

With the introduction of Black Friday, increasingly a debate over the effectiveness of pre-Christmas and Christmas sales has dominated sales. As inflation limits the amount that consumers have to spend, they have begun to think and act critically, so as to avoid needing an IVA in the new year. This year was no exception.

The rise of online retail, in which you cannot always see the quality of your goods before you buy them, and the increasing use of sales, has made consumers more suspicious of discounts for the sake of discounts. As Jeremy Schwartz, former chairman and chief executive of The Body Shop argued:

‘Customers are getting so savvy and cynical about discounted products… Those retailers that have brought something new – a great quality, a great innovation, something new, and held their nerve on price – have been the ones who’ve been the winners’.

He refers to shops such as Next, who managed record increases in sales, while refusing to participate in Black Friday. The effectiveness of Black Friday can be brought into question, as there is often a ‘hangover’ effect that means that for the first week, or so, of December, consumers spend little as they no longer want to pay full price. This could mean that gains over the weekend can be lost over the proceeding weeks.

Doing Black Friday Right

As such, it seems that a winning formula has emerged in terms of Black Friday success stories. Dixons Carphone, for example, used Black Friday to sell products and promotions that they would not normally sell. They offered a limited amount, and this ensures that they are not simply selling products that they could have sold full-price.

As Roberts notes: ‘By having products just for Black Friday, Dixons is generating incremental spending that wouldn’t have happened anyway… One-off merchandising is the most sensible way to go, otherwise you’re diluting your margins’.