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Financial freedom can feel like an impossible dream to some people, but there are ways to take control of your spending without reducing your quality of life too much. Budgeting means that you can still allocate funds to ensure you’re covering all your essential expenses, but you can also afford to do some of things you enjoy, too. There will always be a certain amount of sacrifice and self-discipline required, but with enough practice and forward planning, you can make significant changes. This is our guide on how to budget effectively.

Work Out What You Are Spending Each Month, including impulse buys and unplanned purchases.

This can more difficult than some people first realise. Though direct debits and standing orders are easy to keep track of, all those coffees, sandwiches at lunch time or things bought on a whim are less easy to remember. Start by looking over your bank statements and take notice of cash withdrawals and small card payments. Since the birth of contactless transactions, its easier than ever to rack up a sizable amount of over a short period of time without even realising it. Be honest with yourself and look at how much you are wasting. Though it can take some time, it is usually possible to identify areas where you can make some improvements.

Take care of the essentials first

Always make sure that you’re paying off any essential bills and taking care of life’s necessities such as food, rent or mortgage payments. This can be difficult if you are on a low income but thinking creatively can help. Planning meals and buying ingredients in bulk, rather than relying on ready meals means that you are not only eating healthy, but also cutting back on costs quite significantly. Planning a weekly or even monthly diary of meal plans can save you a lot more than you may first expect. Similarly, allocating funds for your bills and rent payments means that providing you are earning, you should always have enough to cover the cost of living.

Budget for leisure time as well

Contrary to popular belief, you don’t have to completely eradicate any areas of your life that are enjoyable just because you are trying to save money. Obviously, you will need to make considerable sacrifices and be far more aware of what you are spending your money on, but with careful planning, you can still provide yourself with a modest budget to use for entertainment and leisure. Planning is the key as this allows you to estimate how much a certain event may cost. You can check the prices of cinema tickets online and most restaurants and bars now have menus for you to browse before you arrive. Allocating a set amount for leisure time each month means that you can still feel as if you are giving yourself a little reward, rather than just existing and getting by.

Take advantage of offers and discounts

From theatres to online stores, everybody in the entertainment business frequently offers special discounts that can save you a lot of money. Rather than buying brand new games, movies or other products as soon as they get released, it often makes sense to wait a while as the price is generally around half what you would usually pay when they are considered “brand new.” Look around online and always make sure you compare prices before deciding to make a purchase. Voucher codes, special offers for brand new customers and sales can all be fantastic ways to pick up quality products for bargain prices.

Keep track of your savings as well as your spending

Even if you can’t put money away, it can make sense to keep track of how much you have saved each month, compared to when you were spending without a planned budget. This allows you to see the difference in real terms and can be a great way to motivate yourself to continue to be as thrifty as possible. If you can afford to put money aside, watching this accumulate can be very satisfying as you can begin to plan further into the future.

Budget for slightly more than you think you’ll need

This may sound unusual but there is some logic to this argument. If you can be disciplined enough to stay within your budget, you will notice that you will always have a little spare money left over at the end of each month. That means you can use this towards savings, repayments or leisure activities. Even a small amount, put away on a regular basis can make a significant difference in the long term. Overestimating by a five- or ten-dollars extra means that you can either keep the money for next months budget or use it for additional purchases.

Shopping on a budget

Though its great to have brand new or branded products, there are many alternatives out there for a fraction of the price. Shopping in thrift stores, using budget supermarkets and non-branded products is a very effective way to cut your shopping bill in half. Taking advantage of bargains on eBay, Amazon and the other ecommerce sites out there can also allow you to find quality products for a fraction of what you would usually pay for them brand new. This style of consumerism takes planning and careful organisation, but it can also be extremely rewarding. Another advantage is that it makes you question the value of the things you purchase. In many cases, people will pay top dollar for something just because of the name or logo, rather than looking at the functional aspects such as how long it may last or the build quality.

Ultimately, saving money through budgeting is all about thinking things through carefully and planning for the future. A little effort at the start of the month coupled with a healthy dose of self-control can work wonders for your finances and let’s face it, when you feel in control of the money you have, the world seems like a much nicer place to be.

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