Managing Money

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Our top tips!

  • Budget
    Budgeting is an important part of managing your money. Take the time to think about the money that you have got, and the things that you need to pay for. Whatever is left is your disposable income, which you can either save or spend on non-essential things.
  • Focus on your basic maths skills
    Polishing your basic maths skills will be really helpful in improving your money management skills. Being able to work out in your mind what money you have left when you are shopping, for example, will help you to preserve your money without accidentally spending too much.
  • Think about the things that you are buying
    Always think carefully about the things that you are buying to ensure that you don’t max yourself out. This is especially true if you are on a very tight budget – your future self will thank you!

Why is managing money important?

Managing money has different meanings for different people. You may see it as something simple – saving money. You might go about your day knowing it is used as a form of exchange where you expect to receive something for what you give. This topic allows you gain a basic understanding of its value and how it should be “managed”. You can find tips for what you should and shouldn’t do with your money, as well as guidance on how best to think about it.

Everyone chooses their own way to manage their money, and its important for you to find yours before you need to start looking after your own finances. It’s a really good idea to take the time to think about your regular income and finances. Sometimes a spreadsheet (on Microsoft Excel or Google Sheets) can help with this. You can put your income (from your job, student loan or incomings), as well as your regular outgoings (such a rent, bills, petrol and food shopping). Once you have taken your regular costs away from your income, whatever is left is your disposable income. You will need to consider what you want to do with that disposable income.

If your outgoings are more than your income (meaning your total spending on rent and all your bills is more than the money that you make) then you should take time to consider if everything that you are spending money on is essential. If you look to start cutting a few things out, it can help you to avoid overspending.

How does money work?

Money often works in weird and wonderful ways, but essentially is your means for purchasing all the things that you both want and need. There are lots of aspects to the way that money works, and it’s important to make sure that you understand the basics first. The basics include:

  • Banking – including setting up a bank account and online banking.
  • Basic budgeting – understanding your income and expenditure.
  • Savings – Saving money is important for later in life. Think about what you can realistically save, as this will help you out when you are older.

Once you understand the basics, you can think about other ways to manage your money. It’s always good to make sure that you really understand what you are doing with your money.

If you are considering how you manage your money from a long-term perspective, it could be worth speaking to a financial advisor every so often. This can be particularly useful if you are thinking about investing your money.

How do I look after my money at university?

If you are starting university, this is likely to be the first time that you have been fully responsible for your own finances. This can be daunting, but the following tips can help you to manage your money while you are studying:

  • Think about your budget – Before you go to university, make a note of everything you will need to pay for regularly, such as bills and food. Set money aside to cover the essentials. It is unlikely that you will get the numbers exactly right to start with, but you can adapt your budget as you become more familiar with your incomings and outgoings.
  • Consider a part time job – Getting a part-time job can supplement your student loan and increase the money you have available to spend. Devoting a little time each week to earning money can give you the means to enjoy your time at university a bit more.
  • Avoid using a credit card if you can – Although spending without money coming out of your account sounds like a great idea, a credit card gives you access to money that is not yours, so you will have to pay it back at a later date. Most banks allow students to have a free overdraft, which is usually a better option.
  • Don’t be scared to talk to your parents – If you’re confused about money management or think you’ve made a mistake with something, don’t be afraid to speak to your parents. They will be able to help you out if they can, or give you advice on what you can do better.

What do I need to consider when thinking about money?

Ignore the myths

There are many myths that you might hear about money, but it is best to ignore them. Some myths include “money is the root of all evil” and “I need to be lucky to get it”. Remember that you need to work hard for the money that you earn and, as a result, you should be able to enjoy that money and the benefits it brings you!

Understand the value

The value of money is hard to define, and it can be especially confusing when you first start managing money by yourself. The value of money changes depending on your situation, so it is important to make sure that you understand what you have and what you can afford and only spend within that.

Track your expenses

It is important to know that as your income rises, so do your expenses. Sometimes your expenses can go beyond the money that you have, which is why it is important to track your expenses to make sure that doesn’t happen. You could create a spreadsheet, or use online banking to help with this.

Be disciplined

Being disciplined is really important. Small decisions that will help you to save money add up, which makes  managing your money much easier. You have earned your own money, so should enjoy it; however, try not to spend your money just for the sake of it and consider the long term benefits of keeping some money set aside.

I think I might need some help... what do I do?

Managing your money can be tough, especially if you have never had to do it before.  You may even be at a later stage in your life and be looking for other ways to maximise the money that you have. Either way, there are plenty of people that you can talk to who can help you out.

Get support!
If you think you are worrying about your money, reach out to somebody and get the support you need.
Speak to us

Managing money can be stressful but it doesn’t need to be. Sometimes all you need is someone to talk it through with you to help you get the ball rolling. A lot of our friendly mentors have had to learn how to manage money, and they could certainly help you out by talking it through with you and giving you advice.

Speak to somebody you trust

A lot of the people in your life, such as parents, older siblings and other family members, have all had to learn how to manage money. They will want to help you out if they can so that you are not struggling or worried about money. You can reach out to them and talk through some of your troubles.

Speak to a financial advisor or a bank

If you are planning to put your money into more long-term or high risk opportunities, it is a good idea to speak with a financial adviser who can give you professional advice. These services usually come at a cost, but it can certainly be worth it.

What do I need to know about lending and borrowing?

Lending money – giving money to others:

  • Try to avoid lending money unless you absolutely have to. It can be hard to ask loved ones, friends and family to pay money back that you have loaned to them, which can mean you end up without lots of money that you would otherwise have at your disposal.
  • Set expectations from the beginning. Tell them when you want the money back and ask them to agree to your terms before giving it to them.

Borrowing money – taking money from others:

  • If you are borrowing money from a friend, or family member, make sure that you will be able to pay it back on time.
  • If you are borrowing money from a bank or a lender, you will have to pay interest. Make sure that you can afford this interest; if you can’t, it will keep increasing and you will find yourself owing far more money than you initially anticipated.
  • Always avoid “pay day loan” services that charge huge interest rates.

What do I need to consider when saving money?

Set yourself targets

Setting yourself targets is a great way of pushing yourself towards saving money. A target may be a particular value of money saved by a period of time, or a target to be able to afford something you would like to buy, such as a holiday or a house.

Make a plan and stick to it

Once you have your targets, you can start to make a plan on how you want to save. There are different ways to do this. Some people set up a direct debit, and others just transfer their left over money at the end of the month into their savings.

Don't go crazy

It’s important not to go crazy every month. It’s easy to do when your pay first enters your account and it looks like you have a lot of money, but remember that money has to last you the month and help top up your savings if you want.

Treat yourself

Don’t go crazy works the other way as well. It is not healthy to  obsess over saving money. Although it’s great to build up your savings for many reasons, it’s also important that you enjoy your life and don’t deprive yourself of good experiences.

What else can I do with my money?

There are other ways to manage your money other than simple budgeting and basic saving. Many long-term solutions to managing your money also exist.

It is really important that you speak with a financial adviser before taking on some of these opportunities, to make sure that you understand your portfolio and the full risks. Some options include:

  • ISA accounts – These are a type of savings account that usually offer higher interest rates. You normally have to keep this money in the account for a certain period before being able to withdraw it, so make sure that you do your research before.
  • Investing money – Another myth is that saving money and investing money are the same. Investing money usually means purchasing stocks and bonds in particular companies. This can be very risky and you shouldn’t do it unless you have taken the time to develop a thorough understanding of the market. Lots of people manage to make money from their investments, but a bad investment can result in you losing money.

Make sure you do enough research before putting your money in accounts or investments.