DON'T OVERCOMPLICATE IT!

Managing personal finances can feel overwhelming for many working-class people in the UK. Blogs, books, and financial gurus often present complex systems and intricate budgets that seem unattainable or overly restrictive. The truth is, personal finance doesn’t have to be complicated. At its core, financial success boils down to two simple principles: spend less and earn more.

Let’s explore how these two straightforward steps can transform your financial life without the need for fancy apps, detailed spreadsheets, or endless stress.

The first step in taking control of your finances is learning to live within your means. Many people overcomplicate budgeting with dozens of categories, but here’s a simpler approach: track your biggest expenses and make mindful decisions about what matters most to you.

1. Identify Your "Big 3": For most households in the UK, the biggest expenses are housing, transportation, and food. Focus on optimising these first:
   
   • Housing: According to the Office for National Statistics (ONS), housing costs, including rent or mortgage payments, make up around 28% of household expenditure. Could you downsize, find a flatmate, or move to a less expensive area? For example, moving from central London to a nearby borough could save hundreds per month.
   • Transportation: The ONS reports that transport accounts for approximately 14% of household spending. Consider using public transport with an Oyster card, cycling, or carpooling to cut costs. Switching to a smaller, fuel-efficient vehicle or using car-sharing schemes like Zipcar could also help save money.
   • Food: British households spend an average of £3,312 annually on food, according to Statista. Reducing takeaway meals and cooking at home using meal plans can help save hundreds of pounds each year. Buying own-brand products from supermarkets such as Tesco or Aldi can significantly lower your grocery bill.

1. Practice Delayed Gratification: Before making a purchase, ask yourself if you really need it. Studies suggest that waiting 48 hours can significantly reduce impulse purchases. For example, adding items to an online basket but delaying checkout can help you reconsider unnecessary spending.
2. Cancel Subscriptions You Don’t Use: Streaming services, gym memberships, and subscription boxes add up quickly. A study by TopCashback found that the average Brit spends over £300 annually on unused subscriptions. Regularly reviewing direct debits can help you identify areas to cut back.
3. Shop Smart: Use cashback websites like Quidco, compare prices on platforms such as MoneySavingExpert, and shop during seasonal sales. Opt for supermarket loyalty cards like Tesco Clubcard or Sainsbury’s Nectar card to accumulate points for discounts. Bulk-buying non-perishables can also save money in the long run.
4. Set a Spending Rule: Adopt simple rules like the 50/30/20 method (50% for needs, 30% for wants, 20% for savings) or aim to save at least 10% of your income each month. Many UK banks, such as Monzo and Starling, offer budgeting features to help you track and categorise spending.

Cutting costs is powerful, but there’s only so much you can trim before you hit a limit. That’s where increasing your income comes in. Earning more opens up opportunities to save and invest, paving the way to financial freedom.

1. Leverage Your Skills: Think about your talents and hobbies. Websites like PeoplePerHour or TaskRabbit can connect you with clients for side gigs. For instance, freelance writers or graphic designers can earn extra income by completing short-term projects.
2. Ask for a Pay Rise: If you’ve been performing well at work, it might be time to negotiate a higher salary. Research market rates for your role using websites like Glassdoor or Indeed. Present evidence of your contributions, such as exceeding sales targets or improving processes.
3. Upgrade Your Skills: Invest in qualifications or training that increase your earning potential. For example, obtaining an AAT accounting qualification or a PRINCE2 certification for project management can open doors to higher-paying jobs. Many local councils and job centres offer free or subsidised training.
4. Explore the Gig Economy: Apps like Deliveroo, Uber, or Just Eat allow you to earn money on a flexible schedule. According to the ONS, over 4.4 million Britons are part of the gig economy. Delivering food or providing ride-sharing services could supplement your income without long-term commitments.
5. Start a Small Business: Whether it’s gardening, cleaning services, or personal training, small businesses can be a rewarding way to earn more. For instance, offering weekend dog-walking services could bring in £200-300 extra per month.
6. Monetise Your Hobbies: Love baking, crafting, or photography? Platforms like Etsy or Not On The High Street enable you to sell handmade or customised goods. Setting up a small stall at local markets or fairs can also help you earn extra cash while enjoying your passion.
7. Rent Out Assets: If you own property or other assets, consider renting them out. Services like Airbnb allow you to earn money by letting out a spare room. Alternatively, renting equipment such as tools or cameras through sites like Fat Llama can bring in additional income.

The beauty of focusing on these two principles is that they’re universal and adaptable. You don’t need a finance degree or a complicated system to succeed. By consistently spending less than you earn and finding ways to grow your income, you’ll create financial breathing room and opportunities for the future.

Statistics back this up. According to a survey by The Money Charity, nearly 9 million adults in the UK are over-indebted. By adopting these principles, you’ll build a financial buffer to handle emergencies without relying on credit cards or loans.

Instead of stressing over every pound or obsessing over tracking apps, take a step back and keep it simple. Personal finance isn’t about perfection—it’s about progress. Start today with small changes, and over time, you’ll see the results. Consistency is key: even saving an additional £100 per month adds up to £1,200 in a year, which can be invested or used to pay down debt.

Remember: Spend less. Earn more. Everything else is just details. With discipline and focus, you’ll be well on your way to financial stability and peace of mind.