You can beat the financial blues! The first thing to do, whether you are feeling the squeeze or not, is to cut down on your spending

When money is flowing, most of us form habits that become unsustainable. We need to change these habits. Depending on your lifestyle, a change in your spending patterns could lead to a healthier life and a more financially secure outlook on your future.

A budget

No one would deny that money makes life more comfortable. However, comfort doesn't necessarily equate with personal satisfaction and happiness. Have you ever felt that no matter how hard you are trying, you are just not achieving your personal goals?

Almost all personal achievements require some financial resource. A holistic lifestyle means that your spending is aligned with your personal priorities that will help you to achieve personal goals and lead to more satisfaction in your life.

You need to decide what your priorities are, budget accordingly, and stick to your budget. Single people, couples or those with children will have different priorities, but the key is to decide on a realistic and mutually beneficial budget that can be stuck to.

Spiralling out of control

When money is tight, a lack of financial control becomes more tangible and results in increased stress. The more you lose control over your personal finances, the more likely you are to become helpless, particularly in the current financial crisis.

The signs are obvious: do you regularly ask yourself where all your money went? Do you often run out of money half way through the month despite having a good wage? If so, you need to take control so that you can reduce stress and become better at making financial decisions that will help your overall lifestyle.

Making changes

Spending decisions affect how we live, but reducing spending doesn't have to reduce the fun in your life! Prepare a list of everything you spend money on and ask yourself: Does the spend reflect the importance of the activity? Could you achieve the same effect in a different way? Here are some examples:

• Walk or cycle instead of driving
• Park further away for free
• Join a sharing/borrowing scheme
• Rent/hire instead of buying
• Buy second-hand instead of new
• Plan the food you will cook with and eat at home instead of out
• Shop less frequently
• Try supermarket-own brands and always buy loose fruit and veg
• Shop around, particularly for bulk purchases which might be cheaper elsewhere
• Shop on a different day/time
• Join or start a skills-sharing club
• Learn a new skill or get resources to do or make it yourself
• Save money by reducing unessential or unused expenses (i.e. energy saving, subscriptions, memberships etc)
• Research cheaper credit or higher interest rates, better insurance deals, dual fuel offers
• Use ISAs, take advantage of interest free credit card offers, re-mortgage
• Find out if you can pay off your loans more quickly

Financial planning

Creating a more secure future requires money management skills, discipline and facing up to your debts. It makes sense to ensure any loans or credit card debts are secured, and carry the lowest interest rate that you can find.

Avoid the punitive costs of unsecured loans or being at the mercy of a lender. Reducing debt, saving and investing wisely, staying in control of your money, finding additional income sources and keeping up to date professionally will increase financial stability.

Face up to financial difficulties and it will help you to learn how to manage money well, find out why and how you make financial decisions, regularly review your financial state of affairs and earn a sense of being in control.

Changing habits

Your aim needs to be to change your spending habits. Firstly, look at how and when you spend money. Make it a habit to collect receipts and record spending. You can use a pen and paper, PC spreadsheet programme or money management software. Consider which one would suit you best.

Money management software has the advantage of being easier to use, offer more security of your data and produce financial reports helping you to understand your financial situation. Most software manufacturers let you try their products, and they will offer technical support and future updates.

Whichever recording device you choose, make sure you include everything, and complete it on a regular basis. Once you know where your money is going, you'll be able to improve your financial decision-making, and feel much more in control. The other important point to remember is that if you can sort your finances out in difficult times, you'll really be winning when the economy gets back on track again!

By Gunda Wise of Thuthuka Ltd, developers of the RicherMe® personal money management software tool. www.richerme.com