Start at the foundations and work your way up through the Quids in! Payment Pyramid. Consider what Makes Life Easier the icing on the cake.
1. CANNOT AVOID
Things like rent and council tax cannot be avoided. If we want a place to live, we have to pay for it.
If you consider TV an essential, then the TV license goes here. If we don’t pay, sooner or later it will end up in court and a conviction, or even eviction may follow.
Landlords and councils are there to help but cannot afford to let arrears go – or everyone will start doing it. Costs like this are the foundations upon which our lifestyle is built. If you are struggling, talk to your landlord or an advice agency.
2. CAN CONTROL
Gas, electricity and water rates (if we have a water meter) are things we can control. There’s lots of advice about ways to cut down these costs by reducing energy or water use.
Debts we owe might sit here as there are options for reducing them, even if repayments must still be made each month. Debt advice agencies, Citizens Advice or moneysavingexpert.com can help us minimise what it costs to pay off debt.
Unlike the Cannot Avoid expenses, getting behind with what we Can Control is more likely to cause debt, stress and potential legal action, but not homelessness or prosecution.
3. CAN CUT BACK
These are not luxuries but things like food, clothes, transport, kid’s stuff and general shopping items. Once we’ve budgeted for the Cannot Avoid items and looked at what we Can Control (and set goals for reducing the bills), we need to look at spending smarter.
Changing to own-brand groceries and buying/cooking in bulk and freezing future meals can save a chunk.
Going online or opting for second hand can save a fortune on clothes, toys and games. Taking a walk instead of a short drive or bus trip will help, too. Put what you save into What Makes Life Easier.
4. MAKES LIFE EASIER
It’s up to you how you spend any money left over. Many of us fancy a smoke, a pint or a night of TV to help us cope with strife.
And it’s not just the unhealthy stuff that goes here. A gym membership might be here, as might the car, or trips out with the kids.
If the money’s not there, it’s not there, and no-one’s going to die and nobody’s going to come after us if the cutting back starts here.
See the Quids in! monthly budget planner here.