How to get debt free in a year
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Answer a few simple questions
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Understand your next steps
Follow our top tips for building your saving pot.
- · Create and stick to your budget.
- · Cut back on non-essential spending where you can.
- · Prioritise debts over saving.
Saving can be pretty tough at times. Sometimes it seems that, as soon as you get some money in your pocket, it’s gone again to pay for something unexpected. But don't become too disheartened! If you’re looking for some saving inspiration, have a look through our top tips. If you follow our advice, you should see a difference in the amount that you’re able to stash away.
1. Your budget is your friend
This is the most important factor when it comes to good money management. A good, solid budget will make sure you always have enough to cover your outgoings and that you have something left over at the end of the month as well.
Don’t worry if you’ve never created a budget before – it’s a simple process. You need to put aside some time and go through everything you spend in a month and everything you earn in a month. It might help if you have some paperwork in front of you, like wage slips, bank statements and bills. If the numbers are there in black and white it’s less likely that you’ll forget something or make a mistake. When you've worked out your income and expenditure, take what you spend away from what you earn. You’ll then be able to see how much money you realistically have each month to save. Don’t forget to factor in those infrequent costs that can creep up on you and ruin your best laid plans for your money – think car insurance and your TV licence.
2. Cutback on non-essential spending
This can be a tricky one, especially if you don’t feel that you do much non-essential spending in the first place. Nevertheless, every little helps so you should have a look at your spending habits and see whether there are any areas you could cut back on. Sometimes a few little adjustments can add up to a big difference in saving potential.
One way to help with this is to keep a spending diary for a while. Over the next month or so, why not jot down everything you spend money on. When you look over it you might be surprised or see patterns that you didn’t know existed. It’ll also be easy to pick out the things that you could live without if they’re there.
3. Don’t put saving before paying off debts
Are you trying to save at the same time as paying off debts? If you are, then it’s important to remember that your debts should be the priority. This is because the rate of interest you’ll be paying on your debts will be higher than what you will be earning on your savings. So it makes sense to pay these off first. This doesn’t mean you shouldn’t be putting anything towards your saving pot if you have debts, just make sure that you still have enough to make your repayments.
We have lots more tips on how to save on each area of your life, so make sure to have a look round the rest of the money-saving section.
by Christine WalshBack to blog home