How to manage your money and improve your finances?

1. Understand your financial situation and spending habits

Your first step is to take a look at your monthly spending habits and try to categorise them. You can either do this manually or through the help of budgeting apps. This will help you budget for the future, as well as give you a firm foundation for where you’re at now.

Here are some of the common spending categories you might find on the average budget:

• Debts (loans - student, car, personal or bank or credit card)

• Entertainment (going out, hobbies, sport, concerts, streaming platforms subscription, etc.)

• Food (groceries or restaurant bills)

• House (rent or mortgage)

• Savings (education, retirement, or any other saving pot you may have such as holidays, emergency, etc.)

• Transport (gas, taxis, or public transport)

• Utilities (bills related to internet, phone, electric, water, gas, or TV)

• Insurance

• Healthcare

• Clothes

• Any other spendings, such as special occasions (treats and gifts)

Once you have a full understanding of your financial situation and the types of things you spend money on, you can move onto the next step – taking a look at your savings and money goals.

2. Cut any unnecessary spending

Itemising your budget might take a while, but it’s a worthwhile endeavour because it will lead you to find out which categories you don’t really need to be spending money on. For example, are there any subscriptions you’ve let go on too long? How about products or services you don’t use anymore?

Cost cutting is one of the smallest ways to make a massive difference to your financial health and success.

3. Set specific and realistic saving goals

Got long-term or short-term goals in mind? It really doesn’t matter! What matters most is that you set them and stick to them. Doing so can do a few things for your newfound financial success.

It can build up motivation for you to save money. Whether you’re saving for a big purchase like a house, or another “big ticket” item that you can’t fit in your daily budget – you can build your confidence over time through proper money management.

We’d recommend, however, that you don’t start too big in the beginning. Set goals and amounts that are easily reachable in the first month, then increase the amount in the next month once you’ve reached your target.

4. Pay off debts, if you can

Paying off debts early is easier said than done. Given that most debts incur interest over time, it can be difficult to manage and improve your finances efficiently. If you have any money set aside, it would be wise to consider using this money to pay off your debts in order to avoid higher interest  payments over time.

5. Create savings pots

One of the simplest ways to manage your money is to create savings pots. These are specific accounts where you’ll portion out your savings in order to budget more effectively. Then, as soon as you get paid, you can put money aside into these pots and not touch it until you’ve reached your savings goals.

You can do this either on a monthly or a weekly basis – largely depending on how and when you get paid. Some banks also offer a ‘rounding up’ feature, which allows you to put whatever is leftover in your current account into your savings account at the end of the month. However, this can sometimes make it difficult to track your budget accurately.

6. Budget, budget and budget

We’ve already covered how the 50-30-20 rule can help you when it comes to budgeting. Overall, budgeting really is one of the most important habits to get into, in order to achieve overall financial health.

Taking into account the spending categories you’ve already identified, it’s time to build your budget. You can do this manually (entering the data in an Excel spreadsheet or Google Sheet), or through the help of an app. Give yourself a realistic target for each category and try to calculate the percentage of your budget that this category is taking up. Use your financial goals as a kind of a ‘North Star’ guiding your spending habits day-to-day.

The savings pots that you built up can be used for a variety of purposes. Whether that’s holiday savings, the amount you send to family each month or for a life milestone, such as a wedding.

Finally, the hard part! Sticking to your budget. If you can do that each month, then you will quickly (and sometimes drastically!) improve your finances.

7. Track your spending

Tracking your spending is key because, most of the time, it’s the small purchases adding up that ultimately makes the difference in terms of managing your money.

It’s easy to quickly overspend on a budget, when you have one too many takeaways a month! Or if you have an expensive subscription that’s slowly draining your bank account.

There are a few ways you can track your spending and manage your money. You can try keeping receipts to enter into your budget manually, keep note of your spending in a notebook or notes app, or even integrate your bank account data into an app that tracks your spending.

8. Don't forget to treat yourself

Motivation is key when you want to improve your finances and manage your money efficiently. But, even as we’d advise sticking to your budget, it’s important to treat yourself!

This can be a small purchase here or there that falls outside your typical daily necessities. You can even create a separate savings pot that acts as a ‘Slush Fund’ and put any leftover money that’s not accounted for towards this just-for-fun-fund.

9. Buy for the best price

One of the other big budgeting and managing money tips that often helps people improve their finances is shopping around for the best price. You can do this by using price comparison websites for big things (like a car purchase) or small things (like food shopping).

You can also sign up for apps which mine sites for discounts or promo codes to use. With these in-hand, you can save a bit of money on discretionary purchases. Finally, you can buy things second-hand in order to find cheaper alternatives on products and services that you really need.

10. Have a look at your credit report

Your credit history is a record of your borrowing and responsible repayment of debts. If you’ve not been behind on your debt repayments before, you’ll likely have a very good credit score. This score is a numerical value that’s assigned to help creditors assess your creditworthiness.

There are a range of places where you can obtain this data in order to better understand your financial situation, such as through ClearScore or Experian.

Those are our top 10 tips for money management and getting on the path to financial success. One of the ways that we can help you on this journey is through the portion of your budget that you spend on “family gifts” or general financial support. If this month is looking good for you and your budget, feel free to use our app or our website in order to transfer money back home to your preferred receiver. Happy budgeting!

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Managing your money: FAQ

What is money management?

Money management is the process of working through your financial situation systematically to track your patterns of saving and spending.

Why is money management important?

Some of the advantages of money management include giving you better control over your finances by giving you a complete picture of your financial situation. It can help you reach your savings goals over time and even increase them, once they’ve been reached!

You can also use money-management techniques in order to pay any debts you’ve incurred during your days of wild spending.

Learning to control and manage your money wisely is a life-long process, so don’t worry too much if you don’t get the hang of it in the first month. As long as you have your budget in place, and do your best to stick to it – you’ll be just fine.

What is the 50-30-20 rule in money management

In the world of money management, this rule dictates that 50% of your income is to be spent on your essential needs. 30% is to be spent on things you want. And the final 20% is either to be spent on paying off debts or transferred into savings.

This communication is intended for marketing purposes only and does not constitute or provide legal, tax, investment or financial planning related advice