Budgeting is one of the key skills every adult needs to know–the ability to work out how much can be spent on different elements and how much should be saved is one which is vital to navigating everyday life, especially in those tight periods.
As budgeting isn’t commonly taught at school, it’s something which some people can find very difficult. The temptation to go on a spending spree on payday can be overwhelming, and a budget which is too tight can be very degrading and difficult to stick too.
Beginning A Budget
The first step to completing a budget is to add up how much income you have. This should include every source of money, from benefits to permanent and temporary job income.
Next, work out what you spend. The first few entries are usually relatively easy to figure out, such as rent, but for bills and food, keeping receipts or writing down your expenses over a few weeks can be helpful–you’d be surprised what those extra trips to pick up more milk are costing you! Your figures need to be accurate, or your budget will fall apart, so make sure you include truthful, realistic amounts for each category. Remember to include things such as night outs, magazines, luxuries and coffee, too!
Include annual costs. How much does it cost to MOT, tax and insure your car? How about your annual holiday, and any Christmas spending? Do you save a bit for emergencies each month? How much, on average, are your minimum payments towards credit?
Spending Money
Once you’ve added up your spending, subtract it from your income. If you’ve got some leftover, this should be savings money–have you been saving this, or is it being spent on small expenses? If you are left with a deficit, your current lifestyle is unsustainable. It is time to determine how can you cut back.
Getting Help
If you find budgeting very difficult, you can get a surprising amount of help from advisors at finance recruitment companies, who can look through your figures with you and suggest areas to cut back, cheaper insurance or better interest rates on credit. If you find budgeting easy, you could arrange an appointment to discuss a higher income with a financial career.
Once you’ve got a budget in place, remember to stick to it, and review it every few months to make sure it is still up to date and relevant. It’ll also need re-doing if your spending changes, such as rate change, or if your income changes. Finally, make sure you allocate a little spare money to yourself each month. You deserve a reward every now and then.