You’ve come to the end of the month and realise your overdrawn.
Now it’s time to create a BUDGET.
It will takes some effort, but it’s a great way to keep track of your money.
Setting up a budget means you’re:
- Less likely to end up in debt
- Less likely to get caught out by unexpected costs
- Able to spot areas where you can make savings
- In a great position to save up for a holiday, a new car, or another treat
Step 1: Get organised and collect some data
To get started on your budget, you’ll need to work out how much you spend on:
- Household bills e.g Electricity
- Living costs e.g Food
- Financial products e.g Loans, insurance, credit cards
Input all of this into a spreadsheet or write it all down on paper.
There are also some great free budgeting apps available and your bank or building society might have an online budgeting tool that takes information directly from your transactions.
Step 2: Work out your income
Next note your regular earnings from employment (after tax, student loan payments, pension contributions etc. have been deducted), then add other sources of income, from savings, investments, self-employment.
It might be a good idea to get an average income from previous income if you don’t get a regular income..
Optional: Ensure you are paying the correct taxes.
Step 3: Bring it all together
Your budget should look something like this…
You should now figure out whether you are over or under spending.
Optional Step 4: If you are over budget 🙁
If you’re spending more than you have coming in, you need to work out where you can cut back or look to increase your income.
This could be as easy as making your lunch at home, or cancelling a gym membership you don’t use.
Some harder steps might be to stop drinking/smoking, get a second job or sell your car.