I believe that everyone should have a budget but there seems to be a surprising number of people who don’t. Just this past week two people have commented to me that they have no idea how much money goes out of their account and what for.
The common misconception can be that budgets are only for people who don’t have much money so need to keep a tight stranglehold on it. This could not be further from the truth. You bet that millionaires have a budget!
First step is to check how much money you have coming in each pay cheque from all of your income sources. If you are self employed then write down the minimum amount you could get paid as it is better to prepare for the worst. You could also do this by working out the average amount you received the previous year
My best tip is to get internet banking if you don’t have it already. You will most likely (I can only speak for my bank) have a section which lists your direct debits and standing orders with the dates that they come out. Write these down. These are commonly: mortgage/rent, council tax, utility bills, car insurance, TV licence, TV package, mobile phone.
Another big expense is food shopping. Are there any other regular things that you pay for? Think hairdressers, prescriptions, petrol, childcare.
Keep a Spending Diary
Keeping track of spending is key. A good suggestion is to write everything you spend each day and see if there are any patterns. Are you buying lunch at work every day and are now able to see how much it adds up over a month? Are you regularly buying a cup of coffee and don’t even realise?
The bonus of keeping a spending diary is not only that you can see exactly where your money is going but that (hopefully!) you will think twice before buying something as you know it will go into your spending diary!
Best Way to Keep Track of Your Money?
This will differ from person to person. A lot of people use Excel spreadsheets. I personally write mine down by hand – I’m not sure why that is?! It may be because it feels more ‘real’ to me when I have it written down in front of me. Find the best way which works for you.
Every year Christmas is at the same time, as are loved ones birthdays. Create a budget specifically for these if you are planning on giving presents that is!
Having a goal
Having a financial goal is the key to success with sticking to a budget. It’s great for motivation and realising that all the small spending prevents you from doing the things you really want will help get the job done!
My husband is really bad with budgeting and forward planning but this is something I am working on!