Make the money you have today go further tomorrow
To mark Financial Planning Week, guest blogger Rebecca Taylor of Dunham Financial Services looks at how following a technique used by Team GB's cyclists you can ensure the money you have today goes further tomorrow.
Marginal gains: Team GB cyclists used this approach to deliver spectacular performance at this summer’s inspirational games.
As it’s Financial Planning Week this week, and I'm a keen cyclist, I'm going to look at ways we use the same principles to inspire ourselves to make our money go that much further.
Here are five simple things we could do to make the most of our hard earned cash by making proper plans and becoming savvy spenders.
Get to grips with the numbers
So what is your number? What do you have left each month after you’ve paid your bills, spent money on food, clothes, car, kids, eating out, etc?
Not sure? Well, that’s your starting point. You need to work out EXACTLY how much money your household has coming in each month, then what you spend on bills, food etc. From that you have your “number”. During Financial Planning Week this free online planning tool is a useful place to start.
There's also Lovemoney's MoneyTrack tool.
Back to basics
Is your number positive or negative?
If it’s positive, use it to save and build up some funds for the future. If negative, it’s time for marginal gains! Try to avoid using debt to make ends meet though, in particular payday loans. This is very basic stuff which is the very bedrock of Financial Planning, but it’s easy to forget and drift into sloppy and costly habits.
Set your target
Once you know your number and what you actually spend your money on you can start to look for marginal gains.
They might sound small but can really stack up and make a huge difference. My challenge to you is to aim for a 10% cut in your household spending in 2013 through marginal gains. 10% too high? Go for 5%. Make it realistic and achievable.
Do your homework
Set time aside now to research how you can cut your spending on the items where you have the biggest costs. It’s really not that difficult.
Be a savvy spender
Use sites like Lovemoney to switch to the best tariff for gas and electric and review it regularly. Using an energy monitor and changing the way you use power at home by turning off lights and appliances, moving to low energy bulbs can make a big difference too.
Make sure you review your phones and broadband, satellite TV, home and car insurance as brand loyalty really doesn’t pay these days. Make it a habit to do a review at renewal to get the best deal available.
Finally, don’t forget the power of using cash. Paying by card lets us add in those whimsical purchases that we don’t need. Avoid the temptation by switching to cash, it’s great for budgeting and you’ll be amazed at the difference it makes.
Rebecca Taylor of Dunham Financial Sercives is the president of the Institute of Financial Planning
Do you agree with Rebecca's suggestions? How do you take control of your finances? What 'marginal gains' do you plan to make in your finances next year? Let us know your thoughts in the comment box below.
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