As we’ve entered another New Year, now is as good a time as any to re-evaluate our spending habits and get our finances in order.
For first-time buyers looking to take that first step onto the property ladder, or existing homeowners wanting to move up to the next rung, Brian Murphy, head of lending at Mortgage Advice Bureau, shares his top budgeting tips for 2022.
1. Cut costs where you can
Cutting costs is undoubtedly essential, but they also need to be feasible. It’s good to understand what income you have compared to your outgoings, so you can prioritise what you do or don’t need. For example, what subscriptions or memberships do you have that you’re not using? Are there any household bills you can get better deals on? Any extra cash you have leftover can then go into a savings account to put towards that all-important deposit.
2. Create a budget
Organising your finances is key to starting your savings journey. Using a budgeting calculator can help keep you on track with what income and outgoings you have, be that for your rent, mortgage or other expenses, while also keeping you on target for any savings you want to make.
3. Save little and often
Saving doesn’t need to be daunting, nor does it need to leave you struggling financially. Rather than setting aside large, unrealistic sums of money that will leave you struggling for the rest of the month, saving small amounts here and there can make a difference to long-term savings goals. It can be as simple as buying cheaper alternatives to your favourite snacks in the supermarket.
Some banks also provide the option of ‘saving round-ups’ meaning if, for example, you spend £1.80 on an item, the account will ‘round-up’ the transaction and put aside 20p in a separate pot. This way you can save little and often without even realising. And you’ll be surprised at how quickly your saving pot grows
4. Consider your priorities
When it comes to your finances, planning is crucial. Depending on how quickly you want to reach your end goal, you may choose to cut out all luxuries like holidays and meals, putting every spare penny towards your savings target. Someone else may want to keep their luxuries but decide against getting a new car.
The key is to get the balance right for you. The best thing to do is sit down, make a budget, and plan what you want to achieve and spend your money on.
5. Shop around for the best deal
A mortgage is one of the biggest financial commitments anyone can make. Whether you’re a new buyer or looking to remortgage, make sure you shop around for the best deals that suit you and don’t get sucked into headline rates. Speaking with a mortgage adviser will help you to understand what the best fit for you will be.
*Brian Murphy is the head of lending at Mortgage Advice Bureau