Money makes the world go around and understanding budgeting, saving, how to manage cash flow and other financial matters is a key component to successful money management.

Some people seem to be born with incredible financial mastery while others are not so fortunate and struggle to make sure that the change they were given at the local corner store is correct. Taking a good hard look at your financial situation will help you know where you stand and how to manage your money more effectively. The most important part of taking control of your financial situation is learning to budget correctly. A budget is a great way to take control of your money rather than letting your money control you.

Set a savings goal

Your mother may have warned you to save for a rainy day, but you didn’t listen and when unforeseen expenses or doctors bills crop up, you may have wished that you had listened to her advice.

The first step to creating a better budget is to set a savings goal, the amount of money that you wish to save and the period of time that you have to save this amount.

Basic is better, there is no need to over complicate your budget or put yourself under unnecessary pressure. Trying to stick to an unrealistic budget is difficult and you may abandon your goal. Write down what your savings goal is and set yourself a realistic timeline within which to achieve it. It is always a good idea to have some funds tucked away in an emergency fund for an emergency or unexpected expense.

Cut down on overspending

How much money do you spend buying takeaways or coffee? Do you brown-bag your lunch to work or spend money on hot lunches? Look at your spending habits and try to cut down on your day to day expenses. Look at ways to make money on the side to boost your finances quickly. Use personal skills or find a side hustle.

Track your spending by keeping all your slips in a box. Add all expenses to see how quickly that cup of coffee here and takeaway there, add up to a lot of wasted money. Once you see how much money you can save by limiting these little treats, you may be more inclined to cut them out.

Create your simple budget

The first step is ensuring your budget is as thorough as possible, don’t leave anything out. Create basic categories and include expenses for housing, groceries, utilities and any debt that you may have. Add a category for day to day spending and keep all of your receipts. Set an amount that you have to spend per week on items such as food and basic groceries.

Track your expenses by charging it

Cash is no longer king, it is much easier to overspend when you are paying cash. Use your credit card to keep track of all the purchases that you have made. This way the bank keeps track of your spending for you so you can easily see where you need to cut back. Don’t get swipe happy with your credit card otherwise this will hinder your budget rather than help you succeed in saving.

When using a credit card make sure that you pay your minimum amount due each month, in fact if you can pay more, you should do so. This will bring down the cost that you pay for interest. This can be a great way to save money and increase your credit score quickly.

Lower your costs

Saving takes sacrifice. Tightening your belt a bit can easily save you money. Lower your telephone bill, switch to a less expensive type of food and buy in bulk or wholesale. Save money by making yourself something for lunch and take it with you to work instead of buying something every day. Use public transport or consider a carpool with another like-minded saver.

Be real with yourself

As silly as it sounds, many people in the UK overestimate how much money they earn or underestimate how much they spend. Be honest with all your expenses otherwise, you are cheating yourself and setting yourself up for failure. Set realistic short-term goals that are easy to obtain. When you see results you are more likely to stick to it.

Stick to it like glue

The most important part about any budget is making sure that you stick to it. You can make as many budgets and lists as you like, but if you don’t stick to it then you might as well throw them out the window. If you overspend on anything the budget won’t balance. Keep focused on the bigger picture and soon you will reach your financial goals.

Maintain a positive attitude

Try to turn that frown upside-down. Don’t get depressed about having to cut back and remember what goal you are working towards! Not having enough money and being up to your neck in debt is the number one stress factor in most people’s lives and the cause of many sleepless nights. Keeping a positive attitude and an optimistic outlook are essential tools to help you stick to your budget.