Newspaper article The Journal (Newcastle, England)

Is It Really Budget or Bust? CAN SETTING LIMITS ON YOUR SPENDING REALLY HELP YOU MANAGE YOUR MONEY BETTER? VICKY SHAW FINDS OUT

Newspaper article The Journal (Newcastle, England)

Is It Really Budget or Bust? CAN SETTING LIMITS ON YOUR SPENDING REALLY HELP YOU MANAGE YOUR MONEY BETTER? VICKY SHAW FINDS OUT

Article excerpt

Byline: VICKY SHAW

SETTING a budget is often seen as one of the simplest ways of getting your finances back on track - but does budgeting actually work? With the Christmas bills having thudded onto doormats and the squeeze from rising living costs expected to take a tighter grip on household finances in the coming months, many people will be mulling over how they can steer their finances back on track.

A research project by financial services mutual Royal London has shed some light on whether a budget could help.

Some of its customers used smartphone budgeting apps, while others preferred to use a pen and paper, over a three-month period.

While budgeting wasn't for everyone and some people gave up, around half (49%) of those who kept going said budgeting was helpful.

More than a third (37%) said they have a better understanding of their income and spending and 34% said budgeting has improved their ability to track their spending.

Several people said they had tried budgeting in the past, but would end up estimating how much they had spent.

But by having to write down or enter into a budgeting app every bit of spending, they had a much better idea where their money went.

Some were surprised by how much they had under or overestimated their spending in certain areas.

By seeing it all written down, they could identify areas where they were spending more than they wanted to, such as on eating out, takeaways, transport or socialising. This in turn helped them identify where they could make savings.

Some also discovered there were areas of spending they hadn't taken into account, such as buying birthday gifts.

Others spotted patterns in their spending - with one person saying they had realised that they made needless purchases on the day their pension was paid in, and another realising they often over-estimated their bank balance because they weren't sure of the dates of various regular payments coming out of their account. …

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