Ways to improve your money management

Most of us know that good money management is essential for a healthy bank balance - but how many of us actually practise it?

In today`s financial climate, good money management is more important than ever. With a few simple steps, you can help ensure that your finances run smoothly and minimise your risk of falling short towards the end of the month.

Top financial tips

Start saving

Saving is a very important part of money management. Most of us will have to depend on savings of one sort or another in retirement, and it certainly doesn`t hurt to have savings available before then.

Savings don`t just provide long-term security - they also provide protection in the short term. If any unexpected costs come up - you might have an expensive roof repair to pay for, or dental work, to name just two examples - then a healthy savings account could make the difference between getting by and falling into debt.

A lot of experts recommend that you have savings equivalent to at least three months` salary - but any amount of savings is better than none at all.

Make a budget

To get a proper idea of how much you can afford to spend on non-essentials like CDs, takeaways and nights out, it`s important to make a budget. This involves setting aside enough money to cover all your essential costs, leaving you with an amount that you know is safe to spend (or save) every month.

To create your own budget, take a look at bank statements from the past few months and make a note of all your regular costs (e.g. mortgage/rent, utility bills, council tax, etc.). This should also include costs that vary, such as food and petrol costs. Give a generous estimate for these, to make sure you won`t fall short. You may find this budget planner helpful.

Add together these regular costs, subtract the total from your take-home pay, and what`s left is your spare income for the month.

Make your money stretch further

When it comes to spending money, it`s surprising how few people take the time to shop around for the best deals.

Some of the biggest examples include things like energy and insurance deals. Thanks to the internet, it`s easy to compare deals - so there`s really no excuse for sticking with just one company if you`re not getting the best value.

It`s also worth comparing prices when it comes to things like food shopping. For example: experiment with a few different supermarkets - and other shops - and see which tends to save you the most money.