A new report by the Financial Conduct Authority (FCA) revealed that around 7.8 million people are struggling to pay bills – an increase of around 2.5 million people since 2020 – as inflation rises.
In tandem, 4.2 million people missed their bills or loan payments in the past six months, while a separate study from Trades Union Congress (TUC) found that 1-in-7 Brits are currently skipping meals due to the cost-of-living crisis.
It’s undeniable that households are coming under relentless pressure with the sharpest annual rise in food prices for over 40 years contributing to the fact that many are simply unable to keep up with monthly bills.
With this in mind, Mat Megens, personal finance expert and CEO/Founder of HyperJar, the nation’s most-awarded money-saving app shares his top budgeting tricks and tips that in order to make the budgeting process that much easier.
The 50-30-20 Rule
If you want to get a handle on your spending and budget effectively, you need to know where your money is going. The 50-30-20 method splits your money into different categories – 50% for needs, 30% for wants, and 20% for savings. However, it still provides flexibility given that everyone has different financial obligations and goals. You can adjust the rule in line with your needs, but it’s a good place to start. The guidelines are:
- Allocate 50% for needs, including all essential payments each month (I.e. housing, transport, food, education, childcare, bills)
- Allocate 30% for wants, including non-essential spending (treats, gifts, restaurant, fast food, social events)
- Allocate 20% for savings and debt repayment (emergency fund, savings goals, credit cards)
Take on a Money-Saving Challenge
Sometimes, healthy competition can be a great method of motivating yourself – especially if you do it with a friend or family member. Try to do the 52-week challenge, where you save one pound the first week, two pounds the second, three pounds the third, etc. – after a year, you end up with £1,378. Alternatively, you can also try the pound-a-day challenge, or create your own game.
It’s also easier to do something when you have someone else to do it with. Getting yourself an accountability partner – or a money buddy – to match savings with you can act as a really effective way to save money. For example, HyperJar lets you share ‘Jars’ with others so you can put money aside, hold each other accountable, and track your progress together.
Read: 8 ways to save money on hot water
Visualise Your Spending and Budgeting
One of the most common mistakes people make when budgeting is that although they set a budget, they may not necessarily track their spending. This means that it could be harder to stick to your limits. Through money-saving apps such as HyperJar, you can get a visual representation of how you’re spending your money through a complete breakdown of your purchases according to category, merchant and savings so you’ll always be on top of everything.
Budgeting templates can also help organise and track your income and spending in a clear and concise manner. When you understand your finances, you can then develop a plan for what you’re saving towards. It can also help eliminate the stress and anxiety of not understanding your spending and encourage you to be more on top of everything.
Save Now, Buy Later
The exponential rise of Buy Now, Pay Later schemes has made it increasingly easy to over commit expenditure and get trapped in a downward cycle – especially given that platforms such as Deliveroo now offer Klarna as a payment option.
Earlier this year The Guardian reported that “almost a third of shoppers who use buy now, pay later credit say repayments on the loans have become “unmanageable”, with the cost of living crisis pushing them into a debt spiral”.
In their app, HyperJar transform the notion of BNPL to Save Now, Buy Later. Through this, users are able to save for something over time and then purchase the item when you can afford it, compared to the instant gratification you get from careless spending.
HyperJar incentivises people to do this as by partnering with some of the biggest brands in the UK to offer people an annual growth rate on their money if they commit future spend to a specific retailer. At 4.8%, this is much higher than the interest offered by regular banks and is a great way of increasing spending power whilst nurturing a positive habit. It’s essentially the opposite of using a credit card because in the long run, you end up paying less.