Tighter lending conditions and the rising cost of living has led to a boom in budgeting, with 78% of Brits now counting the pennies each month, a new study has found.
Unfortunately it seems we aren’t doing so with any great success, as 15.9 million (42%) regularly overspend by an average of £123.
Of these people, almost half are forced to make use of credit cards or dip into long-term savings as a result – the remainder are most likely households trying to set aside additional funds each month.
Need a holistic budget approach
It’s not hard to see why we’re failing to stick to our monthly targets: According to the PayPal study, less than a third of people actually include all their expenditure in their budget.
Instead, almost two thirds account for just the essential outlays (mortgages, monthly bills), completely overlooking the non-essentials (socialising, clothing) that make up such a large part of our expenditure.
This may be stating the obvious, but there’s little point in trying to manage your expenditure if you don’t really know what you’re spending your money on in the first place. Clearly there is a real need for Brits to brush up on their budgeting skills.
Three steps to lower expenditure
Drawubg up a budget is a great way to cut costs and gain greater control of your finances. It is also extremely dull, and thus tempting to cut corners here and there “just to be done with it”.
Unfortunately, do this and chances are your will end up missing your goals. To make the whole process less painful, you may find it helpful to break it down into three phases. Below are the articles that will take you through each of these in detail.
Step 1: Drawing up the actual budget
Step 2: Identifying and cutting essential bills
Step 3: Trimming the fat off your non-essentials
