Managing your cash flow can be a daunting challenge. The ritual evenings at the table with a calculator can be really unnerving for even the most steely homeowner. Rent or mortgage, gas, and grocery bills continue piling up, and they can make you feel powerless to save, or even just get ahead. But money management starts small with good habits building over time. Bringing your finances and cash flow back in check is actually a lot simpler than you might think, and it starts with a few simple actions.
Housing expenses are your biggest outflow.
Your rent or mortgage payment is the largest monthly payment that you have to contend with. In the United States, it represents an average of 33% of monthly income, whereas in Northern Ireland that figure sits just a hair lower, at about 27%. Borrowers living in their own homes fare slightly better in the long run on this expense because they are building equity with their monthly payments, in an asset class that rises in value over time. However, renters are not. Either way, this still creates a drain on your finances that may be holding you back in other aspects of your life. Using a refinance home loan calculator to understand how you could reduce your monthly payment as a homeowner, is a great way to explore your options. It can help you create additional saving potential and clean up your overall cash flow. Alternatively, seeking a new apartment (maybe even a month-to-month lease) as a renter, and so cutting down on your housing expenses, can give you the financial leverage to begin saving for that first home that you have been dreaming about.
Rethink your energy bill.
Electricity is another big draw on your income. Every home needs electricity, but not everyone is getting the best price on this essential commodity. Conducting an electricity comparison in NI will shock you – you could be saving a few hundred bob every year just by calling up a new energy provider and having them take care of the switch for you. Comparing electricity rates is easy to do, and the changeover is one of the most painless ways to save money in existence.
Your electricity is a constant monthly expense. but the rates that you pay fluctuate along with peak timings and seasons. Many suppliers charge a surge rate during the times in which you are bound to be extending your use of the service. In the evenings, and wintertime when the cold sets in, your home’s electricity is called upon to help wash clothing and dishes, run the showers, and heat the entire home, all while suffering from rate increases. Changing your supplier is something you can do as often as you like and without conditions, so taking advantage of promotional or fixed lower rates during these peak usage times by using a different service provider is a great way to really cash in on your saving potential.
Record your spending and retool your habits.
Recording your spending habits for a week is a great way to gain insight into the things you splurge on, the essentials you are paying too much for, and the areas where your budget is already performing well. With a record of your spending, you can sit down at the end of the week and evaluate where you are sinking most of your money. Groceries, eating out, and Amazon purchases are all one-off payments that quickly disappear from your mental running tally. But placing them all in a log and then tabulating the total outgoing cash flow will give you a clear and immediate picture of how you are utilizing your available cash so that you can make adjustments and create extra room for saving.
Saving is a lifestyle choice. If you aren’t already committing a portion of your salary to a savings portfolio, or are, but doing so sporadically, then evaluating these alternative spaces to cut out overspending is a great way to establish or grow your savings in a hurry.