Looking at your outgoings: One day to save yourself mega money
Andrew Stuckey • May 15, 2020
Anyone can benefit from looking objectively at their outgoings - whether you're just curious about where your money's going, or debt is forcing you to take a serious look at your spending.
More than just opening your eyes to your spending habits, though, working through this guide could help you see more of your money left at the end of the month. We're going to keep it simple, too: you only need one day to sit down and sort it out.
By the end of it, you might not see yourself diving into pools of cash like Scrooge McDuck in Ducktales – or sleeping on a pile of money with many beautiful ladies like Rainier Wolfcastle in the Simpsons – but you'll certainly see plenty of returns if you play your (credit) cards right.
AM: Budget breakdowns
Get breakfast, have a cup of coffee, and sit yourself down at your computer, phone, tablet or just a piece of paper, pen and calculator. You need a broad idea of where everything's going, so spend your morning doing this. Top up the coffee if need be, as chances are it could take a while.
Our Budget Planner tool can help you see which criteria your spending falls into - whether it's 'home', 'utilities and bills', 'groceries', 'travel', 'personal', 'family' or 'entertainment'. It'll also show you whether your spending outweighs your income (a.k.a. the scary bit).
Gather up evidence from the last few months to get as clear a picture as possible. If you need a boost to get you started, use our 'Starting a budget planner' blog post to help you get the most from your budget planning session, and to show you what you can do with the results of the tool.
PM: Break it down more
Grab a bite to eat for lunch – nothing too heavy, as you don't want to fall asleep, do you? – and look at how much you're spending in each section (home, travel, entertainment etc.). It's now time to look closely at all the individual spends that make up the total in each section.
You can use the last two or three months as an example, because even identifying typical spends will help you see where you could make cuts.
Unnecessary outgoings: there's nowhere to hide!
Teatime: Categorise!
Grab a sandwich, you've earned it. Have a crescent of crisps on the plate too, why not? Now's time to go through all the bills, receipts and bank statements you used to get your overall figure. For each spend, decide if it's…
…an essential spend...
This type of spend is essential because it fulfils your basic human needs - food, water, shelter, heating. It also includes essential travel or transport costs, and spending on health and personal care. To a degree, clothing and shoes count too.
...or a non-essential spend.
Non-essential spending includes things like coffees or meals out, gym memberships, new clothes you don't actually need, or entertainment such as going to the pub or going on days out at the weekend. At this stage, the most important thing is to recognise that it is 'non-essential', so that you can write it in this category. Don't worry about the effects of cutting it out just yet.
Evening: Be ruthless!
You're probably pretty sick of doing your budgets by now, but you should harness that anger, effectively hulking out on your financial decisions by being totally ruthless. You've got your list of 'non-essential' spends, and now it's time to put them in order of priority - most important first.
Look at the ones at the bottom of the list. Could you just cut them out straight away?
Working your way up, think about changes you could make to cut out or reduce these spends - making your own coffee before you leave the house, bringing lunch in to work, seeing friends at home rather than going out, for example. You could also research ways to do the things you enjoy for less - such as switching to a cheaper gym.
Everyone can feel like they're denying themselves all of life's little luxuries when they start looking for places to make cut-backs, but when you do it, ask yourself how much it would mean to you to be debt-free, or to have savings.
The next day: Take it further
Yeah, alright, we did say that it took one day – but the hard work's over, and it's good to sleep on your future financial commitments. You've clamped down on your non-essential spending, now how about whipping those essential outgoings into shape? Here are a few things to lay out as targets over the near future:
Sort out your payment methods:
Take each spend on your list and look for a cheaper option or alternative. Could you sign up to pay your bills through Direct Debit, perhaps? Could you buy a monthly bus ticket, or a season ticket for the train, if it works out cheaper?
See what you can get for cheaper elsewhere:
Money comparison sites and coupon or deal sites could help you slash the price you pay for utilities, travel and other essentials - in fact, comparing deals on things like energy bills and mobile phone contracts could save you hundreds of pounds each year.
Check those receipts:
If you've been a bit frivolous with your spending in the last few weeks, or even as far back as a couple of months ago, and you've bought stuff you haven't used or worn, why not take it back? Rifle through receipts and get rid of it. You're decluttering, for one, but also making some money back pretty sharpish.
Auction your wares:
eBay is popular enough with buyers, but have you sold much through it? Well, now's a good opportunity. Rifle through the wardrobes and drawers and get rid of anything you're not fussed with. There's usually no better way to kick-start your finances.