Nationwide explains 'six' major changes UK savers should make 'today' | Devon Live

The building society has advice on methods that could help your finances

Many people discover that establishing a personal budget proves an effective method for managing their money. Yet, creating a budget can seem daunting if you're uncertain about how much to allocate for different outgoings.

A technique suggested by Nationwide might assist those finding it difficult to put money aside, as it divides expenditure into 'musts', 'wants' and 'savings', The building society's website features a page entitled 'How to Budget' which explains how to implement a budgeting approach called the '50-30-20 rule'.

Describing the benefits of budgeting for achieving financial objectives, Nationwide explained: "A new budget can help you track your money in a way that suits you. Whether that's using a budget planner, an app, a budget spreadsheet or pen and paper.

"Although it takes some effort, getting it done could mean you find it easier to cover essential costs, cut back or save. Read our six steps and start today."

According to the Mirror, the first stage involves calculating your net income, which comprises your take-home wages, any benefits received, share dividends, and income from additional sources. For those who are self-employed, this figure is usually based on average monthly earnings.

After determining how much money you're receiving, the next step is to calculate your outgoings. Nationwide said: "Some like to go through their paper statements, others prefer spreadsheets and some like to keep it within an app. It's up to you as long as you're able to be as accurate as possible."

The guidance recommends compiling a list of all your outgoings, including bills, subscriptions, and rent or mortgage payments. It's also important to account for spontaneous purchases or social activities, such as eating out.

Next, you can organise your spending using the 50-30-20 rule. Nationwide said: "Creating a budget plan should be personal to you and help you decide what you want to spend, and where you've decided to cut back.

"Doing this can keep you enjoying the things you love whilst living within your means. "The 50-30-20 rule is a great way to plan out your spending."

Overall, the idea is to spend your income like this:

• 50% on musts – your fixed outgoings and essential living expenses
• 30% on wants – your day-to-day spending and the things you enjoy
• 20% on savings or debt – paying more than your minimum payments or putting money into a savings account, pot, ISA or investment

That said, you don't need to stick rigidly to these percentages if the approach doesn't suit your circumstances. Nationwide explained: "The 50-30-20 rule is just an example. You can split in any way to meet your needs."

You may also try to stick to your chosen framework, but discover it's not achievable every month. When this happens, it could be useful to adjust your budget.

For further guidance, most banks provide advice and budgeting tools on their websites. You can find Nationwide's website here.

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