Budgeting is something that can seem rather daunting. We may feel that it will be hard to do and that we will struggle to even set a budget let alone stick to it. However, it can be a lot simpler than you think.
- Find out what you get paid – to start with you will need to find out how much money you have coming in each month. This is usually salary for many of us, but it can also include some benefits, interest, pension, investment income or other things. Make a note of everything even if some of the amounts are small. Then you will be able to know how much you get a year and a month. It is worth calculating both and noting when money comes in, whether it is monthly, yearly or whatever.
- Find out what you have to pay – next make a note of everything that you have to pay out. This will be things such as council tax, insurance, rent or mortgage, loan repayments, contracts, utilities, travel to work, food etc. We will have a slightly different list. Make a note of all the essentials that you buy and how much you pay for them and when. Some you may monthly, some annually some will be something else. Note it all down.
- Allocate what is left– Now you will be in a position to roughly estimate how much money you will have coming in on a particular month and how much you will need to pay out. You will find that some months will be dearer than others. For example, when you have to pay for your MOT, car service, annual water rates and things like that but there might be some months where you will not have to buy so many things. Make a rough guide. Then you will know how much you will have left each month. You may find that some months there will be nothing left or in fact, what you spend will be more than your income. If this is the case then you will need to calculate how much you will need to put into a savings account for the few months before so that you have enough money to cover those costs. Make sure that you have a good plan which will ensure that you always have enough money to cover the costs of particular months. Then you will be able to calculate how much you have left to spend on luxuries and which months you will be able to afford to do this. You will need to be careful with this money, making sure that you have paid for everything you need first and that there are not any expenses that you have not allowed for that you will need to cover the cost of.
This might seem tricky but if you write everything down, then it should not take too long to work it all out. You will be able to be aware of which months you are better off, how much you should be saving for future costs and what you can spend. If you want to buy expensive things then you will need to save up money to pay for those unless your budget allows it. By tracking everything you should find balancing your household budget much easier and less stressful. It will take a bit of time to do and take a bit of getting used to but once you are in the swing of things it will just be a habit that you stick to and are used to doing.