Debt is a major bugger for many UK natives. Once you fall into the deep pit of drowning in credit card and/or loan bills, it’s hard to get out. There is an average of £39,300 in debt for each UK native.
Budgeting is an essential practice to ensure you aren’t overspending on anything. However, how can you budget when you have so much debt to pay? It’s possible to dig yourself out with careful steps by implementing these 6 smart budgeting habits.
1. Pay the Minimum Payment On Debt Accounts
Despite interest building on your credit cards and loans, make the minimum payment to keep your credit score in good standing. Try the debt snowball method where you pay your smallest debts first before paying off the larger ones. Hence, contribute more to your smallest credit card, if possible, to pay it off faster until there’s no more balance. Then, focus on paying your car loan little by little.
2. Set a Budget for Leisure Activities
Budget for leisure activities such as going to the movie theaters, buying restaurant food, or playing casino games. Playing online casinos can be fun, but it can be a slippery slope if you are not budgeting correctly.
Set a specific bankroll budget and once it’s exhausted, do not deposit anymore until your next paycheck. Bet a small amount for each spin on a slot machine or take a lower risk betting approach when playing roulette to stay on budget.
Do not rack up your credit cards any further with leisure purchases. Plan fun activities over the next few months based on your leisure budget.
3. Use Credit Cards for Emergencies Only
It’s tempting to put regular bills and leisure expenses on your credit card. Get out of this habit. Use credit cards only for emergency expenses such as medical bills you can’t pay off right away or car maintenance repairs your savings account can’t handle.
4. Track Every Pound You Spend
How much are you spending on utilities, food, and household goods? What are you spending at the petrol pump? Track all your expenses by downloading an app like Moeyhub or Emma that connects to your bank account to track this information automatically.
You can also track manually by inputting all your month’s expenses into a Google Sheets document. Seeing where your money goes will help you recognize which categories you normally overspend and how to cut back.
5. Get Rid of Unnecessary Subscriptions
When’s the last time you watched a show on a streaming service you subscribe to? Have you been reading those magazines that come through the post every month? If not, it’s time to cut out unnecessary subscriptions.
For example, if you subscribe to three streaming services, choose the one you watch the most, and pay only for that subscription.
Trying to think of alternatives to enjoy these amenities without paying a subscription fee. Work out at home instead of paying for a gym subscription. Watch shows on YouTube, Pluto, or Tubi for free streaming.
6. Meal Plan and Make Grocery Lists
It’s natural to want to grab takeout when you have had a hard day at work. However, this causes overspending when you could be writing a grocery list and planning meals to make and eat at home.
Aldi and Lidl offer budget-friendly off-brand foods at the fraction of the cost to stretch your budget. Look for their yellow stickered items that only have a few days left before their expiration date. Freeze the meat or baked goods for later meals or prepare and eat them within 24-48 hours. This buying hack creates affordable meals for even less than the original cost.
