I’ve been a student (a pennywise student at that), I’ve lost money, I’ve gained money, invested money (wisely and some less so) and throughout it all, it wasn’t lost on me that I hadn’t, in fact learned how to manage my finances. Rather, I had to learned by doing – and in some ways, experience is the best teacher.
With that in mind, financial education for me seems to be a predominantly middle class phenomena and it’s for that reason, I feel, many people of a background where being educated about financial planning meant saving to survive as oppose to thrive, lack the know-how in how to approach the balance between saving an spending.
That’s where budgeting comes in.
There may have been times where you’ve been strapped for cash due to bills, unforeseen costs (I don’t even want to discuss my last laptop breakdown payment) and essentials. That’s why I’ve come up with some handy tips and tricks for you to manage your personal finances:
Everyone has different experiences, and as a result, their pocket is affected accordingly. Keep a tracker of your incomings and outgoings. Long gone are the days of building a spreadsheet tracker (though this can be helpful), apps like Monzo and Yolt can help manage your spending.
Monzo allows you to create savings ‘pots’ for particular life events i.e: graduation, weddings, birthdays or a rainy day. Each time you spend in store, your Monzo card will take the remaining change and allocate it towards your pot. This is a simple, yet effective, way of building your wealth from within and encourages self-sufficiency.
Not to mention, Monzo also offers ‘monthly reports’ which guide you through your spending habits over the past month. This is an excellent way of finding out what your main pitfalls might be during the month. Spending a little too much on your daily lattes? Spurging each month after payday and then scrimping in the lead up to the next? The monthly report provides great analysis in suggesting where, to begin with, your finance journey.
Yolt enables you to track your spending across multiple bank accounts (savings, current, etc.), thanks to open banking. By consolidating all your accounts into one single app, you’ll be able to understand your cashflow in a more succinct manner with dedicated categories highlighting your spending habits in certain areas of your life i.e fitness.
It works in a similar fashion to digital banks however, Yolt is not a bank account and therefore does not provide any additional banking services such as overdrafts and loans.
Image: Reference to 50:30:20 rule
Granted, not everyone knows how to save – and sometimes it can feel like it’s a lot easier said than done. That’s why I recommend taking baby steps. This includes challenging yourself to take on the 1p Savings Challenge.
The 1p Savings Challenge is a 365 day challenge, starting with a saving of 1p on day 1 of the challenge, and a gradual increase of 1p per day until the 365th day:
…and so on until day 365 where you save £3.65
Do this over the course of a year and you will save a total of £667.95! (Or £681.61 during a leap year).
Understandably, however, you might need to save for the immediate future, as oppose to the long term. I would therefore recommend considering the 50:30:20 rule. This is where you put 50% of your monthly wealth towards your needs. These include groceries, bills, and necessities, 30% on wants such as clothes, leisure activities and 20% goes directly into your savings pot. This is definitely a manageable and sustainable way in which to save for the future.
A great way of learning how to budget is by calculating the cost of your necessities (food, travel, bills etc.) and withdrawing an extra £50 for the week. By ensuring your overheads are covered and there is some cash for an emergency, you can leave your card at home and spend your money in a more efficient manner. This is particularly useful for short term savings goals.
No, I don’t mean you should indulge in riba, but rather take a look as Islamic banks on the high street and online. Whilst they won’t be offering interest on your returns (Alhumdulilah), banks like Al-Rayan offer shariah compliant savings products with the intention of generating profit. This profit is then shared amongst savings account customers, depending on how much is saved. Gatehouse Bank offer the same ethical standards, however, profit rates vary across different banks so it’s definitely worth doing your research before you open an account.
Uneesa runs a communications consultancy called Rizq which looks to empower Muslim women in increasing their financial literacy, as well as providing communications strategies to ethical brands. When she’s not spinning stories, you can find the term ‘Arsenal Sympathiser’ no longer stands on her Twitter bio @alluneesaknow.
By Amaliah Team