- Primarily, the problems with budgets is that they never seem to last because they do not take into account the daily things you like to indulge in such as your morning coffee before work. This exceptional budgeting guide factors all this thing which you value.
- A way to track how you good you are financially stable is to see if you spend more money than you earn. If this is the case then a budget is what you need because you are overspending. Once you know where you’re spending, you can start to alter and prioritize what you do with your money to enable you to stick within your means this can be difficult as certain situations can arise and if you have a spending problem already this can seem impossible.
- To learn how to budget effectively you need to take out time and assess all your incomings and outgoings. A reputable source for this is to look at your bank and credit card statements which shows you what you’ve really been spending. This will show the drinks you have, lunches, dinners and the quick buys you do which is all included in your actual real total spend. The main error that most people make is that they try and paint a general picture. For example, you could be spending £112 a month on your car but you really need to be able to break this down into insurance, petrol, break-down cover and maintenance.
- Doing a budget on paper is easy, the difficult bit is sticking to it. That takes either strong discipline or a decent technique. There is a simple, but powerful technique to help you take control of your spending. It’s called piggy banking.
- Your bank account lies. When you check it, it only shows you a simple snapshot of the scene that day. It misses out what payments are due in or out, when direct debits are paid, and when you need to go shopping.
- To get back on track, your finances must lead your lifestyle, not vice-versa. Many people look for the cheapest way to do something. Yet if you’re overspending, it’s more important to curtail that – meaning that you’re spending within your means.
- Once you’ve piggy banked the cash you need for bills and other spending, it means whatever you’ve got left in your main bank account is actually spendable each month.
- The other benefit is that you really know how much money you have to spend at Christmas or to go on your holiday – there’s no fooling yourself anymore.
- It’s perfectly possible the end result of this is that you can’t afford the holiday you wanted. But more importantly, it means if you follow it properly, you won’t spend what you can’t afford.
Budget Planning for the whole family:
Student Finance:
- With headlines shouting about £50,000 student debt and that getting bigger as living loans increase in 2017, it’s safe to say many students and parents are scared by this huge sum – and worry about how they’ll ever repay it.
- What you repay solely depends on what you earn after university. In effect this is, financially at least, a ‘no win, no fee’ education. Those who earn a lot after graduating or leaving university will repay a lot. Those who don’t gain too much financially from going to university will repay little or nothing.
- Once you leave university, you only repay when you’re earning above £1,750 a month (equivalent to £21,000 a year) and then it’s fixed at 9% of everything you earn above that.
- You stop owing either when you’ve cleared the debt, or when 30 years (from the April after graduation) have passed, whichever comes first. If you never get a job earning over the threshold, it means you won’t have repaid a penny.
- It’s one reason those who are near retirement, who don’t have a degree and want one, find it very appealing as unless they’ve a huge pension, they know they’ll never have to repay.
- All student loans since 1998 have been repaid through the payroll just like income tax. What this means is that once you’re working, your employer will deduct the repayments from your salary before you get it. So, the amount you receive in your bank account each month already has it removed.
- Until 2012 there was no ‘real’ cost to borrowing money via student loans, as the interest rate was set at the rate of inflation (RPI). So, borrow a shopping trolley worth of goods and you’ll repay enough to buy the same, even though the actual cash amount may increase.
- When student finance was first introduced in 2012, the idea was that there would be some expensive degrees and some cheap degrees and they were charged between £6,000 and £9,000.
- Frankly, now almost all universities for full-time students charge £9,000 and they’re going to be allowed to increase with inflation in the future, meaning some 2017/18 starters pay £9,250 tuition fees.
- Full-time students at the start of their course can also take a loan to pay for their living costs, eg, food, books, accommodation and travel. They are known as maintenance loans, and are usually paid in three termly instalments direct to the student’s bank account.
- The Government has already announced it’s selling off the remaining £40bn of student loan debt it has – a concern to many of the over four million university leavers since 1998 with outstanding loans. In itself that can’t change the terms and structures of the way the loans work, but it can change operating practices which may be a pain in the neck for some.
- Yet, it’s important to understand Parliament is omnicompetent. In other words, it’s completely free to make and change rules made in the past. This means there is no 100% guarantee the system will remain unchanged for the 30 years until you’re clear. It’s worth being aware this is a risk factor.
- In the past it has always been thought that retrospective changes to the system go against natural justice and it hasn’t happened – after all each time a new student finance system has been introduced, it has only applied to new starters.
Healthcare Cash plans:
- Even with the NHS it’s difficult not to spend money on healthcare; there are dental treatments, optical check-ups, alternative therapies and more. Yet, used correctly healthcare cash plans allow you to recover these costs and can pay you back over six times what you spend on the insurance cost each year.
- There are lots of plans available so don’t assume they’re all the same. When choosing a cash plan it’s important to pick one that’s right for you. If you have perfect vision, you’re not going to need a huge allowance for optical cover and similarly if your teeth are still pearly white then you won’t need a policy with a big allowance for dental.
- Cash plans are a popular staff perk so before you buy one check whether your employer already provides the cover for free, or for a small amount each month.
- If your employer does pay for your cash plan, they’re not entirely free as although you won’t pay for the plan, you’ll pay the tax on it. So, if it costs £20 per month, and you’re on a tax rate of 20%, that’s £4 per month which you’ll have to pay for.
- You can cover an individual or two adults on a policy and most policies then let you add children at no extra cost.
- If you’ve added children to your policy, it effectively makes it a family plan. The level of benefits for the children on the policy either get their own allowance per child, have a shared allowance between children or share the adult allowance.
- If your cash plan provider rejects your claim and you think it has done so wrongly, do not take it lying down. First complain to it directly then if you don’t get a response within eight weeks, complain to the free Financial Ombudsman.
- The ombudsman is an independent adjudicator that will make the final decision on a claim if you are locked in a dispute with your insurer.
Childcare:
- Even with the NHS it’s difficult not to spend money on healthcare; there are dental treatments, optical check-ups, alternative therapies and more. Yet, used correctly healthcare cash plans allow you to recover these costs and can pay you back over six times what you spend on the insurance cost each year.
- There are lots of plans available so don’t assume they’re all the same. When choosing a cash plan it’s important to pick one that’s right for you. If you have perfect vision, you’re not going to need a huge allowance for optical cover and similarly if your teeth are still pearly white then you won’t need a policy with a big allowance for dental.
- Cash plans are a popular staff perk so before you buy one check whether your employer already provides the cover for free, or for a small amount each month.
- If your employer does pay for your cash plan, they’re not entirely free as although you won’t pay for the plan, you’ll pay the tax on it. So, if it costs £20 per month, and you’re on a tax rate of 20%, that’s £4 per month which you’ll have to pay for.
- You can cover an individual or two adults on a policy and most policies then let you add children at no extra cost.
- If you’ve added children to your policy, it effectively makes it a family plan. The level of benefits for the children on the policy either get their own allowance per child, have a shared allowance between children or share the adult allowance.
- If your cash plan provider rejects your claim and you think it has done so wrongly, do not take it lying down. First complain to it directly then if you don’t get a response within eight weeks, complain to the free Financial Ombudsman.
- The ombudsman is an independent adjudicator that will make the final decision on a claim if you are locked in a dispute with your insurer.