Tips to be smarter with your money

August 14, 2023

Knowing how to be smart with your money can be hard.  Here’s 5 simple things you can do today to be smarter with your money.

1 . Make a budget

Making a budget is the single most useful thing you can do to take control of your money. It helps you see where your money is going, makes it easier to pay bills on time, save money for the things you want, prepare for emergencies and plan for the future.

A budget is a list of all the money you have coming in and everything that is going out. You can make a budget for any period that suits you, for example, weekly, monthly or yearly.

You can choose to make a budget on paper using pen and paper, or a free printable template. You can keep it on a spreadsheet like this free one from The Money Saving Expert. You can make a budget on your phone, in fact, lots of banks now offer budgeting support in their apps. Plus the arrival of open banking has led to the release of more apps to help you budget than ever before. If you’d prefer not to use an app, Citizens Advice provides a tool to help you work out your budget and so does MoneyHelper.

2. Set some cash aside whenever you can

With the increasing cost of living, it can seem difficult to save, and what you can put away will depend on your available income. That said, it’s a good idea to regularly put some money aside for unexpected costs that could otherwise cause money problems. Building an emergency fund whatever the size could help you cope with unexpected changes and avoid getting into debt.

Here are a few ideas to help get you started

  1. Save your loose change in a jar or piggy bank. It’s good to set a rule like ‘I won’t spend any change that’s a 20p coin or smaller’. Instead, put these small coins in your jar. When the jar is filled, take it to the bank for a deposit.
  2. Consider changing how you divide your money between spending and saving. You could use cash or a prepaid card to help you keep track of your spending money. You could set up separate savings accounts for the money you set aside. If you are saving for different goals, consider setting up separate savings accounts for different targets. Some banks will even allow you to set up multiple ‘saving pots’ to help you separate your money.
  3. You might consider automating your savings habit. You could set up a regular standing order into your savings account that coincides with your money coming in. Automatic transfers mean the money won’t sit in your current account, tempting you to use it for unnecessary expenses. You could also use an automatic saving app to help you save by setting spare money aside from your bank account.

If you don’t have any spare money after your outgoings, keep an eye out for opportunities to cut back on nonessential areas of your budget. For instance, if you realise there’s a subscription you’ve not used cancel it and apply the difference to your savings account.

3. Have a regular ‘money day’

Regularly setting aside time to sort your paperwork and look at your money can help you feel more confident and in control of your cash. Take a pause to look at your budget and your recent spending, plan for any events that might be coming up and look at what changes you could make in future. Look over your budget, compare it to what you’ve actually spent then ask yourself the following questions:

  1. What’s gone well since my last money day? It’s important to celebrate the wins!
  2. What didn’t go as planned? These might be areas where changes could help you manage your money.
  3. Was there anywhere you could have saved money? For example, choosing one evening a month to go to a friend’s, or have friends over rather than going for a meal. Or cycling to work on good weather days.
  4. Are there any upcoming bills or events that you need to plan for? Upcoming birthdays? MOT due in a few months? Keeping in mind upcoming costs and planning them in can help you feel more in control.
  5. Are you meeting your savings goals? Regularly reviewing progress towards your saving targets can help you stay on track and achieve your objectives. Don’t worry if you don’t manage to reach your goals every month — the key is consistency.
  6. Is there anything you need help and support with? Managing your money won’t always go according to plan and sometimes we all need a little bit of help. Remember you can contact Citizens Advice.

4. Be smart with credit and borrowing

Whenever you take out a loan, overdraft, credit card, phone contract or use a buy now pay later service you are actually agreeing to a legal contract called a credit agreement. Used responsibly, credit and borrowing can help people spread the cost of larger purchases and build a credit history that can make it easier to access cost-effective borrowing in the future. But failing to manage credit responsibly can affect your credit rating and ability to access borrowing in the future. It can also lead to increased risk of:

  • overspending — including making purchases you wouldn’t necessarily have otherwise
  • paying more through extra costs such as interest and fees for late payments
  • getting into difficulty budgeting
  • getting into debt

There are a few questions that everyone should ask when considering credit and borrowing:

  • Would you make the purchase if credit wasn’t an option?
  • Do you have the money for the repayments after you have taken care of your essential bills and other financial commitments, and will you be able to for the entire length of your agreement?
  • Do you understand the true cost of borrowing i.e. the total amount you’ll repay?
  • Do you understand the terms and conditions you are agreeing to including interest and fees or charges?
  • Are there any alternatives to credit that might be more cost-effective? For example:
  • Saving a set amount of money each week or month
  • Selling unwanted items first
  • Reducing your outgoings

5. Know where to go for support when you need it and don’t put off seeking help

We can all face problems that seem complicated or intimidating. At Citizens Advice we believe no one should have to face these problems without good quality, independent advice.

That’s why we’re here: to give people the knowledge and the confidence they need to find their way forward — whoever they are, and whatever their problem.

You can find lots of information on our website and our network of independent charities offers confidential advice online, over the phone, and in person, for free. When we say we’re for everyone, we mean it. People rely on us because we’re independent and totally impartial.

If you’re having a problem, you don’t have to deal with it all by yourself and more often than not the smartest thing you can do is to seek some advice as soon as possible. You can find details of how to contact Citizens Advice on our website but we’ve also included details below of other organisations that can offer help and support.