The article below appears on WikiHow. The tips are from American writers but most of them apply to Britain too.
1) Analyze your expenses. Budget your money. Find out where it's coming from and, more importantly, where it's going. This can be a very surprising and enlightening exercise for many people.
2) Find where you spend the most money on a monthly basis. The top two or three items are where you need to do the most work.
3) Is rent your biggest expense?
- If so, consider moving to a cheaper place.
- Consider getting a roommate to split the costs of living.
- Consider moving back in with your parents or guardians.
- Offer services (e.g. looking after a relative) in exchange for paid rent and utilities. Motels will exchange maintenance services for free room, particularly during the off season when they usually have empty rooms.
4) Food: are you spending too much?
- If so, begin by saving your receipts every time you go grocery shopping and looking at them to see where most of your money is going. Read How to Save Money on Food.
- Buy mostly vegetables and flavour them with a wide variety of inexpensive herbs and spices carried aromatically by oil. Reduce or eliminate meat by focusing on vegetables with a bit of meat "on the side" rather than the other way around.
- Buy in bulk.
- Go to stores just before closing time and offer to buy what they are about to throw out. Bakeries and bread stores are very good places to approach.
- Raise vegetables in your back yard. Or keep your own bees, for honey (and maybe some to sell!)
- Offer to buy surplus food from hobby gardeners (or, exchange your labour in their garden, for food).
5) Is keeping warm (or cold) burning up your extra dollars? If so, consider ways to decrease them.
- If your heating bill is burning a big hole in your budget, put window sealer in the cracks to block cold air from entering through your windows.
- Invest in warm slippers and a comfy knit hat--it's a lot cheaper to keep you warm instead of the whole house.
- Turn off lights and appliances when you're not using them to save electricity.
- Live in a cold climate? Plant evergreens on the north side of your house, close to the house.
- If you live where it is predominantly hot, put up deciduous trees (the ones that lose leaves at the beginning of fall/winter) on the south side. Minimize your air conditioning.
- At night, open windows and run a heavy-duty fan (or even two fans) all night to pull cool air through house. Then, close up early in the morning and block sunniest windows with inexpensive foam art boards. Alternately, reverse direction of the fans to pull air from the shady side of the building inward.
6) It's easy to cut back on entertainment. Think of cheaper ways to entertain yourself.
- Instead of going out have some friends over and rent a movie, play games, or just sit and have a good conversation.
- Limit your alcohol tabs, see if this makes a dent in your entertainment expenses. Buying a cheaper bottle of wine and enjoying it with friends at home can sometimes be as fun as hanging out at the local watering hole. Or, brew your own! Or better yet, quit drinking. It can be unhealthy if not done in moderation.
- Learn to play an instrument! Pick up your old guitar or violin and go find the local folk, jazz, or blues music jam scene. This is really fun and really cheap. There are people jamming everywhere, although it can take some detective work to find them.
7) Do you own a car? Try living without it:
- Sell your car (or don't own one to begin with). This can be difficult to do; especially if cars are a way of life for you. But it's not as terrible as you might think. Calculate how much selling your car would save you annually (including the payments, insurance, gas, maintenance, tickets & fines, parking, DMV fees, car washes, toll, supplies, and after-market parts & upgrades). Would you like to not have to spend that money?
- Alternatives to driving: walking, taking the bus and/or train, carpooling, riding a bike, or using a shared car service like Flexcar or Zipcar. If cars are a hobby for you, see if you can switch to a hobby that demands less money.
- You can get just about anywhere around town on your bicycle! If you do not yet already have a bicycle, get a good quality one (possibly a well-cared-for used one). If you settle for a cheap bike, you will not enjoy riding nearly as much, and the bike will need continual repair. See this article.
8) Cut your communication costs!
- Don't own both a mobile phone and a landline. If you choose to use only a mobile phone, try to find a plan that doesn't charge you for minutes after a certain time of day.
- Consider ditching monthly contract related phone services altogether and get a prepaid mobile phone
- Keep your phone off as much as possible while traveling in order to avoid roaming charges.
- Email is free! Skype is free!
- If you decide to own a pet, here are some ways to save: Consider getting a life long license instead of renewing it each year. Consider making your own dog food. Consider health insurance for your pet. Bathe them yourself instead of going to an expensive groomer.
9) Get rid of your bad habits. YOU know what they are! These bits of gratification are usually what ruins the budget planning for most individuals, because these "packets of fun" tend to be addictive. Get out of these habits, or,better, if you haven't started, don't start.
- Drinking (at all)
10) Develop a budget based on your above spending, with clear goals
- You can do this by creating a spreadsheet or just by writing on a piece of paper.
- Define how much you expect to spend in each of your major categories in the next few months with goals where you can limit some activities to save for larger purchases.
- Don't forget to include a small portion for misc. items just in case. Usually, what ruins a good budget is the ignorance for life's unpredictable circumstances, forcing us to utilize money from our other expenses.
- Track your expenses in line with your budget that you created and make sure not to go over budget. If you allow yourself to overspend a couple of times, your budget will be less helpful and you'll lose more money to things you don't need or could have found cheaper.