Many of us know that keeping an eye on our incomings and outgoings makes good financial sense, but how many of us actually make good on that promise to make a budget and stick to it? Well, according to the latest research from financial services provider SunLife, a significant proportion of people have little to no idea of how much they are spending and receiving.
Survey results revealed that 22% of respondents had either no idea or only a 'rough' sense of how much is going in and out of their bank accounts, and what's more, over a third (35%) admitted that they never formally budget using an online tool, notebook or other method. This could spell disaster, as a sudden unexpected bill or an expensive treat could unwittingly push people into the red.
Perhaps surprisingly, older people are guiltier of letting their budgeting duties slide: the research found that only 32% of over-65s budget formally compared with 57% of respondents aged 18 to 24. This could be due to the younger generation's familiarity with handy online tools and smartphone apps, for the survey revealed that 18% of 18 to 24-year-olds use a budgeting app on their phone or tablet or make use of an online tool to help them manage their finances, something that only 15% of those aged from 25 to 65+ did.
Dean Lamble, managing director of SunLife, also suggests that younger people are more conscientious when it comes to budgeting due to the timing of the financial crisis: "Living through seven years of recession – starting at around the time many of this generation started to become responsible for their own finances – has probably had a huge effect on how they view money. The continuing cost of attending university and buying a first home could also be forcing more young people to keep a very close eye on their finances," he commented.
Keeping an eye on things = happiness
Making a budget and checking that you stick to it doesn't just make good financial sense – it can help you personally, too! The research revealed that those who keep a formal budget are generally happier than those who don't, so really, there's no excuse not to get up close and personal with your finances.
If you have let budgeting fall by the wayside, it's time to get on top of things again. To make things as easy and flexible as possible, why don't you try out some of the online tools that are available? Online banking and smartphone apps can give you immediate access to your current account whenever you need it, which will help you to keep an eye on things. If you prefer to keep your budgeting offline, a dedicated notebook or Excel spreadsheet can do the job just as well. Whichever method you choose, try to get in the habit of checking your account regularly to familiarise yourself with your incomings and outgoings.
Once you know your spending and income inside-out, you can set a budget. If you want to make savings, think about where you can shave off unnecessary expenditure. Cutting that daily take-out coffee can soon add up!
You may also want to think about changing your current account. If you notice that you are usually in credit, for example, it may be advantageous to have a high interest account that will reward you for keeping a certain sum in your account. Alternatively, if you regularly dip into your overdraft, it may be an idea to scout out the most cost-effective deal. Check out our best buys to find the right deal for you and your newly-made budget.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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