Making a budget can be quite a satisfying process. After drawing one up, you’ll probably feel proud – and a little relieved - that you’ve seized control of your finances.
However, drawing up your budget isn’t the most important task when it comes to managing your money successfully; the key to effective budgeting is sticking to the spending plan you’ve made.
This guide rounds up our experts’ top tips for managing your budget successfully and making it go further.
1. Boost your budget by saving on essentials
If your budget doesn’t balance or you’re looking to free up some extra cash, the first thing you should do is try to cut the cost of essential household goods and services. The changes you make aren’t likely to make you feel deprived – but they will help to keep more cash in your pocket.
Cut your energy costs
Gas and electricity companies rarely offer loyal customers the best deals, so there’s every reason to check whether a different supplier could offer you cheaper energy.
The current price cap limiting how much suppliers can charge per kilowatt hour (kWh) for electricity and gas is set at £1,127 per year for a medium user (until October 2020), however, we've found deals offering a saving of over £300.
Find out more: Which? Switch - compare gas and electricity prices
Haggle to cut your bills
Meanwhile, don’t just accept the renewal quotes you receive for utility bills and insurance products such as car insurance and home insurance. By sticking with the same insurer year after year, you’ll miss out on the best deals, which are typically only available to new customers.
Find out more: haggling - learn how to save hundreds of pounds on your bills
2. Cut the cost of your debts
Consider transferring your credit card balance
If you have existing debts – particularly on credit cards – these are likely to be an expensive drain on your budget. With most credit card providers charging typical APRs of up to 19%, owing even a modest amount on your plastic could cost a significant sum in the long run.
Taking out a 0% balance transfer credit card could cut your interest costs dramatically, allowing you to pay off your debt more quickly. In turn, this will speed up the process of balancing your budget.
However, it's important to clear your debt before the end of the 0% period to avoid being charged at the standard APR on the remaining balance.
Find out more: 0% balance-transfer credit cards - we explain how these credit cards work and the best deals
Consolidating debts with a loan
If you’re thinking of applying for a loan to consolidate existing debts, you should ensure you have a plan to pay off what you owe.
Sometimes people who try to bring all their borrowing together in one place continue using their credit cards, ending up in a far worse situation than before.
Find out more: personal loans explained
3. Assess your leisure spending
If your budget still doesn’t balance, it’s time to cut back on non-essential spending. This means prioritising the activities you get the most enjoyment out of and spending less on those that aren’t offering you good value for money. How far you have to cut back your leisure spending will depend on your personal situation.
Spending less on going out and buying new things isn’t easy – but not cutting back now might mean you’re in an even more difficult position later. Remember, if your budget is out of balance in the long-term, you’ll end up with debts that could be expensive and may take a long time to clear.
4. Use personal budget planners and apps
While some people might prefer to use pen and paper to create their budget, others will want to take a more technical approach to track their spending.
Traditional personal finance software enables you to produce a monthly budget and create diagrams to illustrate your spending, as well as track the status of your bank accounts, savings and investments.
But there is also a growing range of budgeting apps you can try that use Open Banking to help you share your financial data in a secure, encrypted way in order to get a better insight on your finances.
5. Generate extra cash where you can
To complement cutbacks in your spending, consider new ways to increase your income.
First and foremost, if you have savings and investments you’re relying on to generate part of your income, make sure they are performing as well as possible. Use the Which? Savings booster tool to find out how much extra interest you could be earning on your cash.
In addition, consider freelance work if your employment contract allows it. Are there ways you could use your skills to generate a little extra income by working in your spare time? (Don’t forget that if you do earn money through freelancing, you’ll need to fill in a self-assessment tax return.
You could also sell unwanted items via eBay, consider renting out your spare room or sign up to rent out your car when it isn’t in use.
Even simple changes to your routine, such as using a cashback credit card instead of your debit card for everyday spending, or making online purchases via a cashback website, could help you generate hundreds of pounds extra each year.
Find out more: 50 ways to make money
6. Use several bank accounts to help you budget
If you’re one of the many people in Britain with more than one bank account, using several alongside one another could help you stay in control of your spending.
Dividing up your income each month and depositing portions into separate accounts – perhaps one for bills and another for spending on yourself – should help you avoid overspending in a single area.
Some people may even choose to open up a second current account specifically for this purpose if they don’t already have a ‘spare’.
Although it’s a useful technique for anyone prone to losing track of how much money they have left for ‘fun’ each month, this ‘piggy banking’ method does mean keeping your eye on several sets of bank statements. You’ll need to be organised and stay on top of the extra paperwork it might generate.
Find out more: challenger and new ways to budget
7. Check your bank statements and bills carefully
Keeping an eye on what money you have flowing into, and out of, your accounts each month is crucial if you’re keen for your budget to stay balanced.
Whether you receive your regular bank statements and bills through the post or online, make sure you check them to ensure that important transactions have been processed correctly – and to make sure that no suspicious spending is showing on your account.
Reviewing your spending on a monthly basis will highlight where you might be overdoing it, and should inspire you to cut back immediately if necessary.
Going through your bills and statements properly also means you’re likely to pick up any problems as they arise. For example, you’ll spot fraudulent activity on your accounts sooner rather than later, if this occurs.
Find out more: best and worst bank accounts - more than 50 current accounts rated
8. Consider keeping a spending diary
Making a note of all your spending for a few weeks is another way to check that your money really is going where you’d like it to.
It may seem tiresome to write everything down, but if you tend to spend using cash rather than a debit or credit card, you won’t be able to track where your money is going simply from looking at your bank statements and bills.
In addition, many people find that keeping a spending diary tends to concentrate their minds on what they’re spending. Somehow, knowing you’ll need to write it down can act as a disincentive if you’re about to splurge on something you could maybe live without!
Find out more: personal finance software - five popular packages reviewed
9. Regularly re-assess your budget
Finally, the key to managing your budget successfully is to ensure you revisit it – and revise it – on a regular basis. As your personal circumstances change, your budget will need to be amended, too.
Getting a promotion or pay rise should mean you rework your budget. While it may seem like an opportunity to loosen up your purse strings slightly, failing to take account of an income rise in your budget could mean you spend it randomly and don’t truly make the most of it.
Each time there’s a change in your situation that will have an impact on your finances, be sure to look at how your budget can accommodate this.
Find out more: how to plan an effective budget - we take you through the maths
10. Get debt help if your budget won't add up
If you’re still struggling to balance your budget after cutting back on spending and are concerned about the amount of money you owe, it’s important to seek help as soon as possible. Spending more than you earn each month isn’t sustainable in the long-term, and will push you further into debt.
There are free debt advisory services that will help you assess your situation and come up with a plan for dealing with your debts. Read our guide 44 tips on paying off your debts and free debt advice contacts for more information and the contact details of debt help organisations that we recommend.
Our experts would always advise steering clear of commercial debt management companies that will charge you a fee for the same services you could get free from charities such as the StepChange Debt Charity (formerly the CCCS), National Debtline or Citizens Advice.