Do you find it challenging to manage your household finances? The current cost of living crisis has made it more difficult than ever, but there are ways to stay afloat despite rising inflation.
Discover how using digital software can streamline and speed up the process and give you extra insights into your spending.
Budgeting apps
Optimise your financial flow throughout the month by taking advantage of budgeting apps. Simply input your monthly income and let the app calculate how much should go towards essentials, spending and savings based on your pre-set percentages. You can view your finances month by month or break them down into daily or weekly spending to help you stay on track.
There are popular apps like Snoop but these often carry a monthly fee. There are free alternatives though, people use tools this free budget planner on Google Sheets. But also a lot of banking apps offer a good breakdown of spending to help you manage your finances, and Monzo have a Pots system to separate out your money which builds good practise.
Online banking
Accessing your accounts has never been easier thanks to the introduction of online banking. Using your phone, tablet or computer, you can log on at any time from anywhere in the world for an up-to-date view of your funds.
You can browse all of your recent transactions, including pending payments that are set to come out in the future. This helps to prevent overspending.
But they are often more than that. They give quick access to exclusive on-line saver rates, and you can very easily move your money about across multiple banks and building societies for the best deals with instant money transfers at no cost.
And they usually give you breakdown of spending and alerts every time your card is used, or notifications about impending direct debits which enable you to ensure you have the available balance.
Step-by-Step Guide:
- Register Online: Visit your bank’s website or app and register for online banking.
- Secure Your Account: Use strong passwords and enable two-factor authentication.
- Link Accounts: You can use open banking to connect all your accounts to have a comprehensive view of your finances.
Security Tips:
- Regular Updates: Keep software and apps updated to protect against vulnerabilities.
- Monitor Accounts: Regularly check accounts and turn alerts on for any suspicious activity.
Automated payments
There’s nothing worse than being landed with an unexpected bill or a subscription suddenly expiring without warning. Minimise the chance of getting caught out by setting up automated payments for your essentials, from your internet connection to car insurance. Linked directly to your bank account, these will come out each month or year without you having to do a thing.
Setting your automatic payments for the first of the month will make it easier to keep track of your available funds. With annual payments, set a reminder on your phone the month prior and ensure you’ve got plenty of money to cover them to avoid slipping into the red by accident.
Also, any credit card should have a direct debit set up on at least minimum payment to avoid missed payments. This helps your credit rating which is the key factor in borrowing money and a wider option of rates. Obviously 100% direct debit to avoid any interest at all is best, if that is possible.
Tips for Setup:
- First of the Month: Schedule payments at the beginning of the month to manage your remaining funds effectively, especially if after payday as things should not bounce.
- Set Reminders: For annual payments, set reminders a month in advance to ensure the funds.
Investment platforms
Do you invest in stocks and shares in an effort to grow your savings faster than inflation? Through digital trading platforms from trusted companies like Tradu, you can monitor the markets and your investments with ease.
These platforms are linked to the live market so you can accurately track trades and trends and make investment decisions based on the latest stats. You can also use apps for portfolio management on the go.
Just remember that investing your money has a degree of risk.
Digital guides
Surfing the internet gives you excellent expert advice at your fingertips, tailored specifically to your unique financial situation and queries. Look for digital guides on money matters you feel unsure of, whether that’s inflation, best practices for budgeting like the 50/30/20 rule or the difference between types of bank accounts. This is a quick and straightforward way to become more financially literate.
Trusted Sources:
- Government Websites: Provide reliable and up-to-date information.
- National News Outlets: Often have sections dedicated to personal finance.
- Bank Websites: Offer practical advice and tools for managing finances.
Regular Financial Reviews
Regular financial reviews are absolutely essential for maintaining your finances, so set monthly financial goals and adjust budgets accordingly. Conducting a monthly financial review helps in tracking progress over time and ensuring short term and long term financial stability.
Review Checklist:
- Income and Expenses: Ensure they align with your budget to pre-empt any debt or bouncing bills.
- Savings Goals: Track progress and make adjustments if necessary.
- Debt Management: Evaluate your debt repayment plan and make adjustments.
Emergency Fund and Savings Tips
Having an emergency fund can help cover unexpected expenses and provide a safety net during financial hardships. This should be a priority for every household, and separate (at least mentally) from savings.
Building an Emergency Fund:
- Automate Savings: Set up automatic transfers to a dedicated savings account.
- Start Small: Aim to save a small percentage of your income regularly.
Debt Management Strategies
It’s pretty simple, unmanageable debt is the path to financial ruin. We all borrow money, either through a mortgage or by credit cards. But managed correctly is the difference in-between paying little to no interest, and all your available funds keeping your head above water.
Different strategies can be employed to tackle debt, such as the snowball and avalanche methods. Either way, it’s essential you face up to any debt soon as possible. If you think it is unmanageable and increasing out of your control, speak to the Citizens Advice Bureau first, as they can give you the best advice without bias or personal gain.
Debt Reduction Methods (after Priority debts are paid):
- Snowball Method: Pay off the smallest debts first to build momentum.
- Avalanche Method: Focus on paying off debts with the highest interest rates first.
Future Financial Planning
Planning for future financial goals, such as retirement, children’s education, and large purchases, is crucial for long-term preparedness.
Planning Tools:
- Retirement Calculators: Estimate how much needs to be saved for retirement.
- Education Savings Plans: Explore options like fixed rate savers or Junior ISAs.
That’s pretty much it, so in conclusion, effectively managing household finances during a cost of living crisis is crucial and achievable with the help of digital tools. By using budgeting apps, online banking, automated payments, investment platforms, and digital guides, individuals can streamline their financial management processes, ensuring they stay on top of their finances.
Just remember, regular financial reviews and maintaining an emergency fund further bolster financial stability, while debt management strategies and future financial planning ensure long-term preparedness.
