I am positive I am not alone in saying that I have been through times where I have been awful with money. Buying things impulsively and not thinking about the consequences. Buying emotionally for a second of gratification only to feel awful about it later on. It then just turns out to be a vicious circle you think you will never get out of.
I would finish work and go into the shops and just pick something up that looked cool or go to a a makeup counter (my ultimate weakness) and just pick something, anything up. I would then get home and have this guilt that I had spent £100 on pointless items that mean nothing to me really. Yes it is nice to have new things but what does that really mean?
Now, my mindset has changed. I no longer impulsively buy things, I am actually excited to finish off all the makeup I have so I can get rid of it. You would never know that I was a complete spendaholic just a year ago. So how did I do it?
1. Have a Goal
There is no point trying to be strict with yourself with money if you don't have a reason why you are doing it. You will have no incentive. You need to sit down and really think about what saving this money will mean to you, what it will mean to be good with money and be able to go through each month without that last dreaded week of living on noodles.
Create a vision board or a mind map of what your life will look like once you have it all under control. You need to really paint yourself a picture so that even when you are having a bad, unmotivated day you can go back to this and remember why you started.
You can even write down milestones such as "When I hit £X in savings" or "When I pay off £X debt". You can even reward yourself. There are so many ways that you can use these little goals and action plans to motivate you to keep going. Trust me you will be so proud of yourself in the end.
2. Create a Budget
We have heard about writing down what we eat and keeping a food diary to help us lose weight and be healthy. So I thought this could also work for my money.
I started off by writing down every monthly expense that I have, so this includes my rent, my groceries, my dog expenses etc. This was everything that I absolutely had to pay each month, so no treats or things I just wanted, but things I truely couldn't live without. So if you know you go to a restaurant once a week, that is not a necessity so that cannot go on this list.
Now that you know how much your outgoings are you can look at how much you can save and how much you can spend and how much can go towards paying off any debts.
My number one rule when it comes to debt is do not pay the minimum balance each month. Trust me when I say this. The debt will take so long to go down and you will be paying it off for years with so much interest. There is no use saving until you have paid off at least most of your debt because the interest rates on a savings account are not going to match any debt so it's best to rid yourself of this interest first. I know there is so much temptation in paying the minimum each month so you have more money to treat yourself but I guarantee the feeling of paying off a credit card is so much better than the feeling of buying a new top you didn't need.
Figure out how much you have left after all of your outgoings, and depending on what this amount is can determine how much you can save or pay off debts and how much you can use as spending money. You want to use more on paying off your debts than you do on treating yourself because you should make sacrifices when you are trying to get back on track with your money. So I have a set amount that I used to pay off my debt and now save every month.
It is impossible to give ourselves nothing to spend each month, no matter how strict you are it is just not feasible. We need to still enjoy ourselves. I actually give myself £50 a week to spend on whatever I like. At first, I really struggled with this and went over my amount quite often, but now I usually never even hit this. This is because since taking my money journey seriously my mindset has changed completely. Once you do something for long enough and take it so seriously then it does stick.
3. Write it down
Now there is no use writing down this budget and then just guessing how much you are spending. You need to write down everything, and I mean everything. Even if you ran into the shop for a can of coke, write it down.
There are great apps for this that work everything out for you. The app I use is called "Spending". Now the first couple of months it is likely that you will miss a couple of days writing in your expenses and then when you think back you will forget but just keep going, one day it will stick. You just have to make it a habit.
Writing it down means that you can go back and look over what you have spent and what you have saved. It will put you in a good position to keep planning and adapting but also motivate you.
4. Review your situation often
Always keep on top of your finances. I check my accounts daily just to make sure I have not missed anything or nothing unexpected has come out of my account. This makes sure I know exactly how much I have and how much I need for the rest of the month.
It is so important to do this not just so you are always in the know with how much you have but if anything were to happen such as fraud on your account you will find out straight away.
Also your credit score. I check my credit score every month and because I have been whittling down my debts it has slowly been going up and it is such a nice feeling seeing that number so high.
5. Do not give up
Like I said before you will forget to write things down or you will find something you just cannot help yourself from buying but you shouldn't use this as an excuse to give up for the rest of the month. We all slip up, especially when we first start out. Just keep doing what you are doing and eventually everything will fall into place.
I would love to hear from you below about your financial journey and what changes you have made. Any other tips and tricks that have worked for you?