In January most people are still recovering from the cost of the Christmas period, and this can send your finances into a frenzy. Therefore, it’s important to take back control of your spending to ensure the problem doesn’t snowball into something more serious. That’s why we’ve put together these 10 top tips to prevent overspending so you can start 2022 knowing your finances are in order.
01: Create a budget
This is an incredibly effective way to prevent overspending. Start by dividing your spending into categories such as bills, food, leisure etc. and then rank them in order of importance. This will allow you to prioritise your spending so you don’t end up getting carried away in the shops, meaning that you can’t pay your phone bill. This free online budget planner is a great place to start.
02: Find out where you can cut back
Once you have made a budget it will be much easier to see where you can cut back. Often good ways to reduce your expenses include cancelling unused subscriptions, finding cheaper utility providers, and shopping at cheaper supermarkets.
03: Open a savings account
It may seem like a stretch to even think about saving when you’re already struggling to make ends meet. However, here at Debt Support Centre, we know that debt problems often result from unexpected events such as unemployment, divorce, or illness, that customers were not expecting to fund. Therefore, it’s a good idea to commit an amount to your savings each month, however small, to prepare for those rainy days.
04: Write down your goals for the year
A great place to start when thinking about your finances is to determine where you want to be by the end of the year. This could range from paying off your credit card debt to obtaining a mortgage on a house, no matter how big or small these may be, writing them down and pinning them on your wall is a fantastic way to motivate yourself to stick to your budget.
05: Increase your income
There are many ways to increase the amount you earn such as starting a side hustle, asking for a pay rise, or increasing your working hours. For more great tips read our previous article on how to boost your salary to make sure you have a bit more money at the end of the month.
06: Become aware of spending triggers
An important way to prevent overspending is to know the situations when you’re most likely to spend beyond your means. For example, if your purse strings become a bit too loose after a few drinks in the pub then it’s important to avoid this situation by only taking out the amount you want to spend with you and leaving the credit card at home. This way you don’t necessarily have to stop doing the things you love but find ways to do them on a budget.
07: Take up a new hobby
Alternatively, if your leisure activities often cause you to lose control of your spending, such as shopping, gambling, or drinking, then it could be a good idea to try and find an alternative way to spend your time that isn’t so costly. For example, this could include taking up running/walking, volunteering at a local charity, reading, learning a new language, playing sport and the list goes on. Starting any sort of new activity can help you to break old habits that cause you to overspend.
08: Avoid being impulsive
The high standard of marketing techniques used by retailers means that it’s easier than ever to get carried away shopping and overspending. Therefore, it’s important to be aware of this to avoid buying things you don’t really want or need. So, why not wait a few days before making purchases to give yourself time to think it through?
09: Don’t fall into a cycle of debt
If you’re struggling to make payments and have creditors breathing down your neck it can be tempting to take out more credit to pay them off. However, due to high-interest rates on payday loans and credit cards, this may worsen your financial and could lead to a continuous cycle of debt. Therefore, taking out these types of unsecured loans should never be used as a long-term solution to money problems. A good way to recognise if your finances are getting out of control is by managing your debt ratio. This means that the amount you are repaying should not exceed 20% of your income. So, if you’re close to this limit then it’s important to avoid taking out any more credit.
10: Reach out for help
If you’re already anxious about your finances and unsure where to turn then get in touch with our friendly advisors today. They’re here to talk you through every step of the process and all your options to help you in the best way possible. We understand how overwhelming dealing with debt can seem and many people bury their heads in the sand until they reach breaking point. However, we’ve supported thousands of individuals in similar situations to yours and most say they just wish they’d got in contact with us sooner.
By: Maggie Elliott
