When you have a well-established budget, it becomes a lot easier for you to keep track of where your money is going and how it is being spent. When you have a budget, it also makes it easier to put aside money to pay for your bills and any additional expense and also helps you set up a plan which will assist you with achieving your financial goals and aspirations.
Here are some tips that will help you get started and help you understand how to set appropriate timeframes for your budget. An example of this would be if you get paid fortnightly you should establish a fortnightly budget.
Record Your Income
Recording your income is easy, you need to write down how much money you are receiving from your job and when you are receiving this money. If you find yourself in a position where you don’t receive a regular income, it is advised that you try and figure out what the average amount is that you usually earn.
This money you earn might come from sources such as; your wages, your pension, any government benefits or payments you receive or it could come from the income you earn from any investments that you have.
Add Up All of Your Expenses
First and foremost, your regularly expense are your “needs” and your essential items that you are required to pay so that you can live your life.
These fixed expenses that you should include on your list include; rent or mortgage payments, electricity and gas and phone bills, council rates, your household expense such as; food and groceries, any medical costs and insurance.
You should also include transport costs such as; public transport fee and car registration, family costs such as; child card, school fees, extra-curricular sporting activities and any baby products if you have any newborn children.
You will also have debt expenses that you will need to pay such as; any credit card payments, any mortgage repayments or any personal loan repayments that you owe.
You will also need to include any unexpected expenses such as; any sudden medical bills, any fees associated with car repairs or car servicing, any extra school related fees or any costs associated with your pets such as; a trip to the vet.
By taking a look at your bank statement and your bills you can make it easier to ensure that you have recorded all of your expenses.
Make Sure You Set a Spending Limit
Any money that you have remaining after your expenses have been paid is money that you can either put into your savings account or can be used to spend as disposable income to purchase; leisure and entertainment activities or new clothes, dining in a restaurant or can be spent on any hobbies that you have.
It is important to make a plan that outlines what you want to do with your spending money. This will make it easier for you to track where it goes and will make it easier to make sure that you stay within your spending limit.
Set Yourself a Savings Goal
If you want to improve your financial situation setting yourself a savings goal would be a fantastic avenue to take. If you have a savings goal in mind than you can use your budget as a vehicle to move towards achieving your savings goal.
Once you have figured out how much money you have available for you “wants”, you will be able to determine how much money you would like to save.
Having some money in your savings account will make it easier to establish a safety net that will protect you financially if there is an unexpected event that occurs and means that you have to spend an unexpected amount of money.
Adjust Your Budget
It is important to update your budget to suit your lifestyle as your life situation continues to change over time.
An example of this would be, if your expenses begin to rise you might need to reduce your spending, or you might need to alter your savings goals.
Furthermore, if you get a pay rise you might be able to save more money or you might be able to pay off more debt.