Mastering your finances in 2020 -

Mastering your finances in 2020

The end of January is upon us, and we’ve managed to make it to the end of the first month of the new year. Many of us will be glad to see the back of this month as it can seem like an age since the last payday. So without further ado, I’m going to share with you some of the best tips I’ve seen and heard in 2019 to help you with your future saving and budgeting. 

50/30/20 method

The 50/30/20 budgeting method is aspirational, and I would definitely recommend it as something to try if you have enough disposable income. With that said, it won’t work for everybody. It will be important to measure your income to see how much you need to balance your income and outgoings.

If this sounds interesting, then read on and learn how you might be able to plan your spending and saving.

Essentially, the aim of financial planning is to split your money up into three pots. Firstly, your needs which consist of everything that keeps the cooker on and the cold out. This would be your rent, gas & electric, food and necessity clothing.

The next stage is your wants, so basically, anything that gives you reasons to be cheerful. This could be a couple of pints, socialising with friends or maybe a nice meal out. The important thing is to remain respectful of the fact that we all have different financial pressures, so it’s not as simple as dividing your money into three pots as accurately as 50/30/20. If this is the case, you could rearrange the figures to help you balance your numbers, an example of this would be 60/30/10 or 70/20/10.

Finally, the remaining 20% of your money goes into your savings account where you can keep it warm for a rainy day or a summer away. This can often be the hardest one to save due to the persistence that you have to put into saving. The best thing to do when saving is keep to in mind why it’s important to save. Emergency funds can be a lifesaver when life throws you a curve ball, so I’d recommend putting some money away as soon as you receive it.

No more pending payments

Mobile banks are really interesting; a lot of people will already have an account with one. For those that have been living under a rock and haven’t seen people flashing their bright coral cards yet, then you’re missing out. 

One of the main reasons for suggesting these challenger banks is the amazing budgeting tools that they come with. This means no more pending payments as you can see the money in your account in real-time. So if you’re in the pub on a Saturday night, you don’t have to worry about a few too many payments leaving your account next Wednesday, because you’ve forgotten about that extra round of beers when the bell rang for last orders. You’re in safe hands as these banks send you a push notification when money leaves your account and this happens immediately as the transaction takes place. As a bonus these push-notifications help secure your account. Imagine if you misplaced your card and a payment went out of your bank account. Thanks to these notifications you can jump onto the app and freeze the card immediately.

The reason I love Monzo so much is because they allow you to set up pots and pay your bills directly from them. This means that if I have £200-300 of direct debits per month, I can put enough to cover them in my ‘Bills’ pot and leave them to get paid without the worrying.

Make sure you research which is best for you before you open an account as each individual account has different benefits. Monzo customers can get paid one day early (see Monzo for terms and conditions). Starling provides unlimited free cash withdrawals abroad at the bank exchange rate, and N26 give you a really cool metal card. So take a good look through and find out what might suit you. All of the banks above offer FSCS protection up to £85,000, so your money would be in safe hands.

Credit union saving

Opening a credit union account has some amazing benefits – for me, putting money away and building my savings whilst building a relationship with an ethical organisation makes me feel like I’m doing something positive. It’s helpful having people who understand the difficulties of living on a budget and it makes me confident that I can rely on them if I need to borrow some money.

Joinng one has revolutionised my finances and now I’m also lucky enough to be employed by one. It’s the best thing I’ve ever done when it comes to managing my money. I was shocked when I noticed how quickly you can build up your savings. Putting just 10% of your income away every month is a positive step to saving, especially if you never have before. Having credit union savings every month means that having money stored away stopped me worrying if I had unexpected expenses.

When you put money away consistently you build a relationship, whereby you can borrow at fair interest rates, whilst positively impacting the local community. As credit unions are not-for-profit organisations, I’m confident in knowing that the interest that I would repay goes to supporting the local community and help credit unions to better assist their members.  

Do I need that?

Whilst I think Christmas dinner isn’t one of my favourite foods, I love mince pies, more mince and even more mince pies . If I don’t plan for Christmas I just feel the added pressure when it gets to the magic mince pie eating day, and more so after it. I wouldn’t enjoy copious cups of Yorkshire tea and I’d have no chance in winning my own one player mince pie eating contest if I hadn’t planned my money right.

As a South Manchester credit union member you can put your savings away in a dedicated Christmas savings account, and we’ll send them over to you as soon as it’s time to buy your gifts.

So my advice would be to start saving for Christmas early. That means when it comes round to the big day you’ve got the money locked away to buy your loved ones’ gifts. Christmas can be a time of great pressure for parents, so it’s important to not get pulled in by what’s going on in your immediate environment. These means don’t feel you have to compete with other parents in purchasing expensive gifts outside of your budget. Managing your budget is personal, I just hope I can help tell you that it’s okay not to spend hundreds of pounds on kids just because social media and advertising tells you that’s normal.

Feeling Ambitious?

Take on the 1p saving challenge.

The idea is to gradually increase the amount that you save over the period of the year. This usually Starts on Jan 1st save 1p, then on the second 2p… and so on and so forth. Realistically, it could be pretty hard to save in January as we’re recovering from the Christmas festivities, so think about starting in February. As you’re going to be financially prepared for this year saving the higher amounts early on will be as easy as ‘minced’ pie.

If you fancy giving it a go, let us know how successful you are and we’ll let you know how much we’ve saved together by 2021. 

So now what?

Well, those are my 8 tips for the start of the new decade. I know some of these tips won’t work for everybody, but if they do, you never know how you might benefit from them.

If you have any tips for us let us know on Twitter or Facebook. We’d love to share them as well as your success stories.

If you fancy giving it a go, let us know how successful you are and we’ll let you know how much we’ve saved together by 2021. 

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