Budget Management
Managing your money is never an easy task! But you can easily start a good money management practice simply by keeping an eye on your monthly expenditure and making a note of how much you spend. Just knowing what is being spent can help you controll your budget.
To help plan your own budget use our Monthly Budget Planner.
It's all about being in control
Even if things look bleak, it's much better to know where you stand than to brush things under the carpet and hope they'll go away. There are lots of easy ways to get better control over your money.
Here are a just few:
Monthly budgeting
The Budget Planner lets you monitor your monthly expenditure as well as comparing it with your income to see what's left at the end of each month. It lets you know exactly how much you have left to spend on other things like holidays or debt-repayment and identify areas where you can realistically cut back e.g. entertainment or shopping.
Credit - Borrowing vs. Saving
Many of us like the thought of putting something away "for a rainy day" however it is far better to use your money to pay off your debts first and then start to save once you have no debts to hold you back. This is because you PAY OUT more interest on your debts than you RECEIVE on your savings, therefore it makes sence to pay off your debts quickly in order to save yourself money on interest payments. Once the debt slate is clean you can put all your effort into saving as much as you can.
Loans explained
These days, getting a loan is easy. Used carefully, a loan can actually help you manage your debt (for example consolidating all your payments into one) - but never forget they're still debts themselves and will need to be paid off.
Consolidation Loans
Why battle with several different loan repayments when you can lump everything together into one convenient consolidation loan? And if you choose a loan with a low interest rate, you could actually find yourself with more money in your pocket every month!
Calculating what you will repay
Remember when you borrow money, you will have to pay back the amount you borrowed PLUS interest. And the higher the interest, the more money you will have to pay back to the lender.
Here's a quick and simple way to check how much your loan is costing you and to see if you should consider switching to a cheaper lender.
Take the monthly repayment and multiply it by the number of months the payment must be made. This will show you the total amount payable which - as you'll see from the following example - can be way above the original loan sum.
You owe £8,000 to various lenders. You take out a consolidation loan of £10,000 to pay these off and give you a little extra in case you need it.
The terms of the loan were: Monthly repayment of £208.13 over 60 months. This equates to a total repayment of £12,480. You now owe £12,480 instead of the original £8,000 or the £10,000 you were borrowing. By taking this loan you will have spent an extra £4,480 in 5 years time, on repayments.
Why pay more than you need to?
Are you paying too much for your loan? It's easier to switch to a cheaper lender than you think - and you could save ££££s in the process.
