How to Spend Less Than You Earn

If at the end – or indeed the middle – of the month the bank account is empty, there are lots of ways to change how you spend your money each month. Many are pain-free and don’t mean a huge lifestyle change. It’s more about looking at your situation and gradually adjusting outgoings over a number of months.

The first place to start is to take a thorough look at the income and outgoings of the household. Drawing up a budget will show every penny coming in and every penny going out. There are many online templates to use to enter the figures, the most important aspect is that every spend – however small – is taken into consideration. Whilst a budget sheet may feel stifling to begin with, after a short amount of time, it will be seen as a great way to organise finances (wikihow.com/Budget-Your-Money). It will also be useful to see if an emergency financial situation is about to arise where a short term loan may be needed. If this happens, talking to the bank or to payday loans companies such as Wonga may be the solution to a temporary need.

Keeping a spending diary is a good way to see exactly where the money goes each month. For anyone who wonders where their income disappears to, it’s a fantastic visual record. It will show all the impulse purchases, the regular coffee and newspapers bought on the way to work and the little treats that are quickly forgotten about after the bank statement has arrived. Plugging the holes in the finances by knowing where money is trickling away to can make a big difference. Some people prefer to carry a small notebook around with them so they can jot down everything as they buy it, others prefer to keep an online note with an electronic diary they can update at any time.

For those who find it difficult to adjust their spending each month on their own, starting a blog or diary with other like-minded people can be a good way to support each other. It needs to be in a non-judgemental environment where issues about life and money can be openly and candidly discussed. It’s also a good way for others to make suggestions from their own experiences

One of the most important aspects of starting to spend less each month is being able to talk openly about any existing debt. Debt will be draining the bank account each month and it’s a vital part of any budget planning. Where a household is headed by someone under the age of 35, 83.5% of those hold debt and it’s as important to tackle the issues around this part of the budget as it is the reduction of spending in other areas.

Cutting back on entertainment, takeaways and holidays doesn’t mean enjoying life has to stop. It’s all about changing habits; have friends round for a DVD night, cook from scratch or visit old friends instead to have just as much fun but without the large price tag.

By making small changes each month, the scales will start to tip and it won’t be long before you have money left at the end of the month. It takes focus and determination but it’s a great way to make some positive life changes and benefits everyone in the family.