If your heart sinks when someone mentions the word ‘budgeting’ then you are not alone. We all know that saving is important, but who wants to live on beans on toast forever, or say ‘no’ to nights out with friends? But whether you are saving for a big purchase or just want to clear what you owe once and for all, a little short-term pain is worth the reward of being debt-free.
Remember too that there are plenty of fun and free (or cheap) things to do in and around Sheffield. The city’s museums, Millennium Gallery, Weston Park and Graves Gallery, all offer free entry, or you could venture a little further for a walk or bike ride in the Peak District. You will also find debt help in Sheffield from the Citizens’ Advice Bureau Sheffield and Sheffield City Council.
At its simplest, budgeting means taking stock of your income and outgoings, often using a spreadsheet. Many people find a budget calculator is helpful, although it’s worth being strategic too – especially if you’re living with enormous debts and feeling overwhelmed by the amount you owe. Whatever your situation, the budgeting plans below will help you get on track.
Set a goal
It is easier to cut back on spending and/or save when you have a goal in mind, like a holiday in the summer, a deposit for a house or to pay off outstanding debts. With a meaningful target to work towards, you will soon be cancelling the gym membership (and any other subscriptions) you don’t use.
Many people love the thrill of finding the cheapest deals at the supermarket and household bills. You can also enjoy socialising with friends using voucher codes for restaurants and the cinema, or better still, by inviting them over for tea and a film.
Try to open another bank account, preferably one paying higher interest, for any savings you make. As long as you don’t touch the money, you’d be surprised how quickly it builds up. Set up a direct debit from your main account for the day after you’re paid, and hopefully you won’t miss it.
We have become so used to paying by contactless that it is easy to lose track of how much we are spending. Sticking to cash brings us back to reality quickly, so the idea of handing over £5 for a sandwich and hot drink at lunch-time, or round of drinks for all your friends in the pub, quickly loses its appeal.
Start every week by withdrawing cash for essentials but spend wisely so you have enough to last. Set aside an amount for food, travel and other living expenses, perhaps putting the money in different envelopes, and try to finish the week without having to fall back on credit and debit cards. Anything left over can go towards your saving goals.
Countdown to zero
Useful for people who tend to over-spend, this type of budgeting challenges you to start each month with zero in your account. The idea is you only spend what you to avoid going into your (arranged or unarranged) overdraft, without sacrificing too many treats. But it’s not for everyone since you have little or no buffer for emergencies, and it’s easy to tip into debt.
Paying off your debt
Providing you meet the minimum monthly repayments, there are two ways to tackle credit card debt – the ‘debt avalanche’ and ‘debt snowball’. The first involves paying off the cards with the highest interest first, so you pay less overall. But this can be a challenge because the debt still feels stubbornly high.
As a result, some people opt for the ‘debt snowball’, which involves paying off smaller debts first then moving onto the bigger ones. While it can be satisfying to wipe the slate clean on each card, remember you could end up paying more on high interest debts.