Too Much Month at the End of the Money? How to Make Your Salary Go Further
05.06.2019 by Jack H
Living from payday to payday is not sustainable. It is stressful, dangerous, and does nothing to support your future. You need to reconfigure your spending habits and even consider making drastic changes – like moving to a cheaper flat, if possible – so that you can have money at the end of the month to put away into savings. Until you can do that you are not living well, and one day an unexpected bill or job loss will come your way and throw your house of cards to the wind.
You deserve to feel financially secure. Looking for a better paying job is a great step, but the only sure-fire way to truly make ends meet and go further past the month is to follow this guide and improve your money-management habits:
How to Make Your Salary Go Further
Understand Your Spending Habits
The first step to working out a budget is to understand where you are currently spending your money. In most cases, it is the little expenses that we treat ourselves to that turn out to be the biggest culprits. Take that coffee you buy on your way to work every day. Total up the costs and see first-hand how much those few pounds add up over time. If you were just to bring coffee from home, you would have been able to afford that trip you were dreaming about in just a few short months.
Then there is the fact that the amount you receive from your job, even after tax, isn’t what you truly have to work with on a monthly basis. There are hard expenses, things like rent or your phone plan that cannot be changed.
Before you can work out where you can save, you need to figure out where your money is going.
Work Out Your Hard Expenses
Hard expenses include:
These are often dictated by fixed contracts. You might be able to find somewhere cheaper after your rental agreement runs out, for example, but until then you won’t be able to move. That is why you will need to work out how much these hard or fixed expenses are and then take it out of your monthly budget. You do not have this money, your landlord and creditors do.
Work Out Your Flexible Expenses
Flexible expenses refer to items you need, but can often reduce. Grocery costs, some utilities like water costs, and even transportation can all be reduced with better spending habits.
Food costs can often get high when you buy for convenience. There are, however, many ways you can reduce food costs and actually eat better than you did before.
Gas and electricity are almost always metered. Water can either be metered or offered to you for a fixed rate. It is up to you not only to work out which plan is best for you, but how you can further reduce these costs by using less and optimising the energy you do use.
Transportation can get costly. Even using public transport can add up over time, but there are ways to reduce the cost.
Tips on How You Can Reduce Your Flexible Expenses
Once you have worked out how much you have spent on both your hard and flexible expenses, it is time to work out ways to reduce those costs. You will first want to start on flexible expenses, and if needs be you can then move on to the fixed expenses like rent.
There are many ways that you can save money on your trip to the local shop. For one, start buying items so that you can make food from scratch. These items can be more expensive than a ready-meal, but that is because they won’t just sate you for one night. Instead, they can feed your whole family or feed you multiple times before it runs out. So long as you plan accordingly so that you use all the food you buy, instead of leaving so much of it to rot, this can easily become a very economical way of shopping.
If you want to reduce food costs even more, try shopping directly from farmer’s markets. Meat, fish, and especially fruits and vegetables will always be cheaper from the source. During winter months when farmer’s markets are not available, you can save by buying items from the frozen section. The fruits and vegetables here can actually be healthier than their fresh counterparts, who have likely travelled many miles to be here in the UK.
To reduce your utilities, you will want to invest in energy-saving tools and aim to use heat less by maximising usage and of course just layering up when you are at home.
If you are commuting and taking the train, for example, see if there is a monthly or yearly pass. Then, see if your employer would be willing to pay for a portion of it as part of your benefits package.
If driving, carpool with your fellow co-workers that live near you. Either divvy up who drives on what days, or have one person drive and the others pay them the portion of costs. It’s a great way to save money and help the environment.
Ways to Save Money Further
When it comes to other purchases, from necessities like a new coat after your old one fell apart, or a new dish after yours broke, there are a few key ways to save money and even get a better item.
Buy Second Hand
Second hand is a great place to go to for household items, furniture, and clothing. Items made a few decades ago were made to a much higher standard than they are today. Not only can you save money on the item, you, in turn, get a higher quality piece in its stead. You can pay a visit to your local charity shop, go online, or visit car boot sales for pieces you need.
Shopping second hand is not embarrassing. In fact, second-hand shopping is set to take over as one of the premium ways people shop, most particularly for fashion.
Borrow from Friends and Family
If in doubt, ask your friends and family if they can help you out by lending something of their own.
Buy in Bulk
For items you use again and again, try to buy in bulk. This works best if you have a lot of storage space you can put these items in. Otherwise, buy in bulk with friends or family and then share the items between everyone, so you all get a discount on items you need.
Keep Track of What You Buy
In order to keep track of how well you are doing, you will want to keep track of everything that you buy. This could mean taking out your weekly budget in cash in advance and then forgoing using your credit or debit card. It could mean buying an old bank book and manually keep track of your expenses that way. Either way, you need to be explicitly aware of your weekly budget so that you don’t go over it, and if you do, to take how much you went over out of the next week’s.
It won’t be fun at first. It won’t even be easy. Keep at it though until you have enough saved away that you can be comfortable even if you were to lose your job for a few months. It’s a lot to ask for, but you will finally be able to sleep peacefully at night.
Tips on How You Can Reduce Your Hard Expenses
If you still need to reduce expenses, you can do so by:
Moving to a More Economical Area
Once your contract runs out, move to a more economical area. You will want to double check to ensure you are saving money, however. Sometimes the money you will save on rent will be lost in higher transportation costs.
Check for Deals Regularly
Stay on top of deals and make full use of them when they come. The deals, in particular, you will want to look at are service options and provider options. You can save money by switching which electricity provider you use, for example.
Renegotiating Your Debts
If you are struggling, contact your creditors to see if they will be willing to renegotiate your repayment plans. This won’t always work, but it can be worthwhile to try, especially if you have also been working on building up your credit rating.
Build Up Your Credit Rating
Another great way to reduce costs that does admittedly take time to accomplish is to build up your credit rating. If your goal is to renegotiate debts, this is often the best and only way to do it. There are several ways you can build up your credit rating score, so see what works best for you.
Set Saving Goals
There are two ways you can set your savings goals. One, you can decide on how much money you want to put away and then work on reducing costs from there. As this can put a lot of pressure on your living situation, it is far easier to work out how much you have saved by making the easy aforementioned changes first, then following these tips to put that money to good use:
Put Money Away at the Beginning of the Month
The best way to ensure you have money left over and in your savings account at the end of the month is to put it away at the beginning. This way you can reduce the temptation of spending it and reduce the likelihood of accidentally spending too much. You will want to put this money into a savings account you cannot easily access.
Invest Your Money
Though you should save up an emergency fund first, you will also one day want to look into investing your money. Investments cannot easily be taken out, and for good reason. The goal is to let the money accrue interest in your favour. Invest in your retirement as soon as possible, rather than rely solely on your pension plan, and you can enjoy a more comfortable retirement.
Know Where to Go In a Pinch
Building up your savings takes time, and even if you were to successfully reduce your costs instantaneously, it might not be enough to cover common emergencies like a repair right away. In that case, it is best to do your research in advance. Look up loan types you can apply for and compare providers. Some loan types, for example, allow you to use belongings you own as collateral. Think of this type of loan as a mortgage. Until you have paid off the loan the item, for example your car, won’t technically belong to you. However, you can still use your car during the repayment period like nothing ever changed. This type of loan is only available to those who have paid off their vehicles, of course, but if you have it’s a great option to choose from.
Find this perfect type of loan for you, so that in a pinch you know where to turn to, instead of feeling rushed into a bad decision.
Money can be tight at the end of the month and every month if you are not exceptionally careful with where you spend it. That is why you need first to work out where that money goes and then take fixed expenses out of the equation. From there you can follow the advice given and work out your own methods to reduce your costs again and again, and in many cases improve your quality of life at the same time.
It won’t be easy and it will take time before it begins to feel natural. So long as you stay strong and even hold yourself accountable, you can adapt your lifestyle into one that allows you to spend more wisely, and save for an emergency fund and put money away for the future.