Budgeting habits are actions that you can integrate into your daily lifestyle to encourage smarter spending, save money and improve your finances. They can help you keep track of your spending and ensure you are contributing towards achieving your financial ambitions. By developing good budgeting habits, you will be more aware of purchases and identify areas you could reduce your spending.
Here are some budgeting habits to get started with.
Establish savings goals
According to research conducted by National Savings and Investments people who set savings goals save up to £550 more a year than people without specific goals. For example, you might want to save for a dream holiday, a new phone or home improvements. Clear objectives of what you are saving for can therefore help you stay motivated. You could also consider setting up various savings pots for different goals and determine an amount for each goal.
Set up automated savings payments
To ensure you save money regularly and contribute towards your savings goals, activate automated payments, into a savings account. There are various budgeting apps that provide sophisticated savings tools for this purpose. Tools include implementing savings categories and applying limits for certain categories. If you activate this, most apps will send you a notification if you go over your budget. Additional app features include creating multiple savings goals and allocating money from your savings account towards these goals. Read more about the best budgeting apps to help you manage your money efficiently and effectively.
The ‘cash only’ spending method
The ‘cash only’ spending approach involves using cash only for your everyday purchases. These include buying coffee, grocery shopping, eating out and other expenses. Instead of using your debit or credit card, try cash only spending for one month. Withdraw cash when you get paid and plan how you will spend your cash during the month. By using cash only, this will encourage you to plan your spending and stay within your budget. For example, if you are going out for dinner, with only cash you will be more aware of your budget. This will ensure you spend within the amount you have allocated for the evening. It might even prompt you to look for discounts and savings too.
Try a ‘no spend’ month
The ‘no spend’ challenge is where you try not to spend money on non-essential purchases for a certain period, for example one month. The objective is to avoid spending money on unnecessary items and help you save. The concept of the challenge is that by drastically reducing spending you will save money by realising how much you are spending unnecessarily. Participating in the challenge allows you to reflect on your spending habits and create a long-term plan for managing your finances effectively.
Limit spending on eating out and takeaways
Do you buy a coffee on your way to work or grab a sandwich at lunchtime? If so, you could be spending thousands of pounds every year. If you spend £10 every day, five days a week, this adds up to around £2,600 a year. To reduce this amount, try eating out for lunch once or twice a week and bringing food from home for the other days. Also consider how much you are spending on going to restaurants during the evenings and weekends and look at how you could reduce this on a weekly or monthly basis. In addition, if you regularly order takeaways consider focusing on home-cooked meals and batch cooking. Read about how to reduce your spending on food shopping and eating out in the article about how to create a tailored budget. You could also try mystery shopping for free eating out experiences.
Discounts, special offers and promotional deals
There are various ways of accessing discounts, special offers and promotional deals to help your money stretch further. By using these over a monthly or annual basis they can make a significant difference to your monthly budget and help you save money. These budgeting habits can therefore help you to improve your finances.
Discounted train tickets
- Researching discounts available for train tickets and booking in advance can help you save money. The different train companies provide various options. For example, the Trainline has a Split Save feature. It works by ‘splitting’ your train journey into multiple tickets, instead of buying one ticket, reducing the price of your journey and therefore saving you money.
Pre-owned clothing
- Buying pre-owned clothing is a budget and eco-friendly alternative to buying new items and can save you cash. The second-hand clothing market is experiencing a significant rise and there are various online marketplaces and apps available. Vinted is an online marketplace for buying and selling second-hand clothes, accessories and gadgets. The app is easy to use and has high-street brands and some big-name designers. Additional benefits with Vinted include no fees for sellers and the ability to generate the postage label within the app. There are also restrictions on using photos from shop websites of the clothing being modelled, to reassure you that what you are buying is authentic.
Discount websites
- There are various websites available that can help you save money by providing discounts, promotional codes, and special offers. VoucherCodes provides discounts and promotional codes for retailers and restaurants across a wide selection of categories including fashion, technology, travel, food and drink, and electronics. Another great discount website is Wowcher, offering deals on experiences, travel and a range of products including electronics and health and beauty. Additionally, consider using cashback websites to receive cashback when shopping online. Read about recommended cashback websites and how to use these to help you save money.
The benefits of budgeting habits to improve your finances
Simple budgeting habits, integrated into your daily routines, can make a positive impact to your finances. By following these budgeting best practices, you can increase awareness of where you are spending your money and manage your income with confidence. These budgeting habits can also help you realise opportunities to save and contribute towards achieving your financial goals.