If you are finding yourself thinking that your finances are out of control, then it is time to start budgeting and getting yourself back on track.
Right, well, so what is a budget? Let’s be simplistic here, add up how much is coming in and divide it by how much is going out. My ratio always appears to be something like 1: 1.2! Not good – so then I have to ‘do without’ for a month and claw back spending. This always leads to a deficit of wants and so I’m back to 1:1.2 again…
Along came this novel idea to budget my life away, no impulse spending, only cold, calculated forethought will lead to success.
Big Data – look at how much you are spending and how much is your income. Your bank gives you reams of paper or on-line figures for you to examine. I you’re like me, after a month you don’t have a clue what many of these spends are all about.
How much money do you net, is the first thing to establish. Start by writing down all the monthly income you get. So, salary, pensions, child benefit or any benefits for that matter (disability allowance, fostering or maternity allowance, PIP, DLA etc). Do you rent a room in your house to a lodger? What about any pay-outs from investments? These are all classed as income, in case you weren’t aware.
Next you need to be looking at what your monthly bills amount to. Start with the fixed type bills like utilities (electricity and gas), TV licence, council tax, hire purchase items and don’t forget streaming services.
Then you need to list out all those store cards and credit cards you’ve been spending on. What about personal loans? If you have multiple cards, loans or arrears of some kind, are you planning to merge them into one easy to manage monthly payment? This is known as debt consolidation. You can find out more about debt consolidation here.
Once you have established these ‘basics’, consider adding annual bills to this mix, such as car insurances and road tax. What about software packages like Office 365 or Antivirus software? Have you got any pets? Think about the vets bill for annual health checks, flea, tick & wormer tablets and vaccinations. How you deal with these is down to you. Perhaps you could divide them by 12 and pay them into a separate account.
Okay then, after all that hard work, just how much month is left after you have completed your budget? Do you have money left for food, transport, entertainment (anything you can cut out like memberships or subscriptions?). Would you like to spread it across the weeks of the month?
How finely you plan your life remains the big takeaway here. Impulse buying or spending will place you in the same old start stop position that you started from.
If you can, try to put a little bit of money away each money for a rainy day/emergency funds. I think we are all advised to have at least one month’s income hidden away somewhere that is difficult to access.
If you put small amounts away regularly, it will soon mount up and also because it is small amounts you won’t notice it missing as much as if it was a larger amount.
Remember to keep revisiting your spending history and know where you are at all times. Who knows you might just surprise yourself!