Household budget 1

Our Guide to Managing your Household Budget

21st January 2021

It’s always nicer to know you’ve got a little spare money in your pocket should you need it, and ultimately no one likes feeling the pinch. However, for many of us this isn’t a reality and we could do with improving our household budgets. That being said, it’s not always that easy to know what to do to make sure this is the case, especially if you have a busy or hectic schedule.

This is where our ultimate guide to managing your household budget can help. We’ve explained why it’s important to budget and given advice on how to become a budget planner extraordinaire in the home.

Why Should You Manage your Budget?

There are lots of reasons why you should manage your home budget. On top of having extra cash in the bank, you can:

  • Rid yourself of additional financial worries
  • Be able to afford your bills more comfortably
  • Have more money available to cover unforeseen expenses
  • Be able to treat yourself more in the long run
  • Work to avoid creating additional debt
  • Look to improve your financial responsibility

What to Consider

Before we explain the steps to take to effectively budget, you’ll need to find out the following information:

  • How much you or any other earners in your household make on a monthly basis
  • What your current average outgoings are on your bills each month
  • Your typical living costs
  • How much it costs to run your vehicle (if applicable) each week or month, or how much you spend on travel
  • An approximation of what you tend to spend on leisure or on personal items

Steps to Take as a Budget Planner

When you have all this information, here’s what you need to do to become a fully-fledged budget planner.

Follow these steps:

Set a Target

The first place to start is by setting yourself a target and goal of how much you would like to try and save each month, or what financial position you would like to achieve with your household budgeting. This then gives you something to work towards – you might also find that you can give yourself an extra pat on the back if you end up saving more than you first thought!

Calculate your Expenses

After this you need to work out how much you are spending each month and you can either simply add this up by using the information you’ve gathered, or by heading online to use a budget calculator. The aim then is to highlight some of the bigger expenses and look to reduce these and help you save.

Take a Greener Approach

One place to start is by taking a greener approach to your utilities.

Gas, electricity and water can all become quite expensive commodities if you don’t manage them properly. We’re not suggesting you do without, but just be practical with how much you use.

Here are a few examples of how to cut back:

  • Avoid baths and take shorter showers
  • Use energy saving or LED lightbulbs and remember to switch these (and other electronic devices completely off, when they’re not in use)
  • Set a consistent, comfortable temperature for your thermostat and leave it at that, as turning it too high will lead to overheating and wasted energy
  • Get an energy audit. A lot of utility companies offer these for free, or you can conduct your own to see where your home is losing energy and improvements can be made
  • Hang wet clothes outside (weather permitting) or on drying racks or the shower rod inside, to reduce high energy use from tumble dryers
  • Clean with cold water. Most of the energy used by your dishwasher and washing machine goes to heating the water. Where possible turn this off to wash in cold water instead and save energy
  • Regularly clean your fridge and freezer, both inside and out. This will improve efficiency, as dirty machines have to work harder
  • Close curtains and doors to keep the heat in rooms during winter and consider installing tinted window film to keep your home cooler in summer

Shop Wisely

Your food bills can be another significant expense, especially if you have a big family. This is an additional scenario where being practical about what and how much you buy is a sure-fire way to save pounds and pence. Heading to discount supermarkets is another way to do this, but cutting down on pricey items like meat and premium brands could also see you save.

Instead of shopping at one of the ‘big four’ supermarkets, surveys suggest you could save up to £25 on a weekly shop by switching to a discount supermarket. This compared like-for-like products between Asda and Aldi, with the majority of groceries at the discount supermarket significantly cheaper. Wherever you choose to shop, a few tips for reducing your weekly bill include:

  • Head to the reduced section; there are always plenty of bargains to be found, some of which can be frozen for later use
  • Price match. Many supermarkets offer a price guarantee against competitors and if they’re not cheaper provide you with a voucher to make up the difference
  • Try own brand products, which are almost always cheaper and barely differ in quality or taste
  • Plan your meals. This way you will only buy what you need and not get drawn into spending too much
  • Compare pre-packed with loose fruit and vegetables, as pre-packed are often more expensive and can be more than you require

Change your Commute

The chances are you’ll probably use a car, or need to spend money on your daily commute to and from work. While the luxury of simply buying a newer, more economical car isn’t particularly viable, a few things you could do to reduce commuter costs includes:

  • Lift shares
  • Buying passes and tickets as far in-advance as you can
  • Walking to work
  • Getting involved in a cycle to work scheme

Limit any Excesses

Cutting back on excesses is perhaps one of the toughest things to deal with – particularly for those of you with busy social lives. Again, we don’t mean you shouldn’t enjoy yourself, but lots of nights on the town and takeaways aren’t conducive to an effective household budget.

Save your Savings

It might sound obvious, but you also need to resist the temptation to dip into your savings once you see your bank balance start to improve. Be patient and give it a few months at least, before you think about what to do with what you’ve saved up. The smart move here would perhaps be to invest in newer, more economical facilities in your home or a greener vehicle.

Monitor and Track

While you’re working on all of this, it’s also important to monitor and track the progress of your budgeting. There are plenty of different budget apps available for pretty much every device, and by getting a visual representation of how your household budgeting is going, you can see where you’re saving well and which areas might need to be reviewed.

Three of our favourite budget apps are:

  • 1 - Mint: A free budgeting app, Mint connects to your bank and uses your details to create a personalised budget. This means you don’t have to manually enter much data, showing your recent transactions, amount spent and left for individual budgets for things like food, clothing, restaurants and more. It uses bank-level security, so you can trust accounts and data are securely protected.
  • 2 - GoodBudget: Ideal for couples and families, the GoodBudget app takes the concept of splitting your money across envelopes into a digital format. The app and your budget syncs across all devices, from an iPhone to Android devices so everyone can see where the money is going. The app is free, though for more envelopes, budget history and more there is a charge.
  • 3 - Wally: For the lazy budgeter, Wally can track all your expenses with a simple photo of your receipt and use location services to identify where you are for logging an expense. You can still manually enter expenses, along with receiving notifications when a bill is due, or you hit a savings target. It is free and available for iPhone and Android devices.

Keep at It

As alluded to above, you need to be strict with yourself and keep working at this, as results won’t magically happen overnight. Effectively budgeting for your household takes time and dedication.

Additional Budgeting Support

There are a couple of other approaches you can take to support your budgeting. In addition to using some of the budget apps and budget calculators we mentioned before, if you needed to consolidate your debts, one of our loans could be a useful solution. Equally, if you needed support to manage your bills in the earlier stages of your budgeting, you could apply for one of our small loans to help cover these costs.

Hopefully the above steps from our ultimate guide should work to put you on the right path to savings and improved financial security.

As we mentioned above, this won’t happen overnight but rather than letting the situation get worse, get started on your home budgeting now and stick with it for as a long as you can.

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