Budgeting to do more than make ends meet

Making ends meet is getting increasingly difficult, as families struggle to cope with ever-increasing prices while their income remains low.

While you can simply hope for the best or, as someone once put it, set up a satellite link so ends can spot each other once in a while, keeping an eye on what is coming in and going out every month by creating a budget is far more reliable – and may ultimately result in finances actually stretching further than was thought possible.

Writing down exactly what is coming in each month, as well as making a list of all expenses incurred during a typical month, will help to highlight ways in which expenses may be reduced. By prioritizing expenses into categories, such as housing and associated costs, food requirements, clothing, costs involved in getting to and from work, insurances etc, followed by all other expenses, a householder is able to determine where funds may be saved.

This means that all costs will have to be included, from rents or mortgages, council taxes, house and contents, as well as life, health and car insurances, maintenance and running costs, such as gas, electricity, water; tax and fuel for a vehicle to telephone and Internet connection, TV incenses or satellite TV subscriptions, weekly shopping including cleaning materials and pet supplies, clothing and any other possible requirements and luxuries.

Doing this will not only provide total clarity as to how income and outgoing expenses compare, it will show where money can be saved. A mortgage payment, for instance, could possibly be reduced by switching to a better deal, while insurance costs can often be reduced by moving different policies to the same provider and taking advantage of discounts.

Expenses for electricity and gas may be reduced by ensuring appliances are not left on when not in use, not leaving TVs or computers on stand-by and reducing the temperature of the home by just a degree or two.

Both car tax and insurance may be reduced by switching to a smaller, perhaps a little older model and fuel can be saved by arranging shared transport with colleagues, friends or neighbors.

Weekly or clothes shopping costs can no doubt be drastically improved by simply opting for cheaper brands, and if those weekly takeaway meals or cinema tickets break the bank, maybe they should be turned into a once-a-month treat. By the time these calculations and improvements have been implemented, there is a strong possibility that there will actually be some funds left to put away for a rainy day or a holiday, even.

Finding the best possible opportunity to save such funds will mean examining and comparing a range of different savings options. For many families, the best choice is represented by the cash ISA. These schemes offer excellent interest rates, are tax free and therefore provide the highest possible returns on funds invested without necessarily having to lock funds away for prolonged periods of time.