Organise Your Finances With A Household Budget
In today’s difficult economic conditions it is essential that we all pay much more attention to our personal finances. The only real practical way to do this is to prepare a monthly budget of your income and expenses . Failing this, you are just leaving things down to guesswork - however educated that guesswork may be - with the possibility that you could inadvertently slip into debt which could easily have been avoided.
Preparing a budget is not necessarily complicated, but will require you to devote a little time to the exercise to get it right
The starting point should be to determine how much your income is each month If you are an employee this should be simplicity itself - have a look at your wage slip and take a note of your net pay each month after deductions
If you work for yourself this may not be quite so straightforward because for most self employed people their incomes varies each month A good idea would be to quantify your income based on an average over, say, six months .
You also need to take note of other sources of income you may receive, like interest on capital or any other receipts due to you The most important thing is that you should look at your income frankly and objectively because it is the starting point for your budget and any inaccuracies here will affect everything else .
Next up, you need to examine closely your spending habits to identify regular outgoings. Work out how much you are committed to pay each month on unavoidable recurring expenses such as your mortgage or rent, heat and light, car expenses - if you have one - and any other regular costs you incur each month. It is essential that you can identify where your hard-earned money goes each month to enable you to create a successful budget
The next step is simplicity itself - simply subtract your outgoings from your income to see where you stand. If the answer you get is a negative number, you will need to take action wuickly to prevent getting into debt So, why not now?
With a bit of luck the calculation will produce a surplus amount due to you, in which event you will have to give some consideration to what you should be doing with the windfall.
It is probably a good idea to divide any such additional monies into three areas In the first instance you will want to put aside some of the excess to meet unforessen expenses such as an unexpected repair to your car or a household repair Next, it is a good idea to allocate some of your surplus to regular savings. In the first instance these savings will be a useful supplement to your contingency fund as referred to above, but after you feel you have a comfortable enough buffer against contingent expenses, you can consider savings for investment purposes.
Lastly you should set aside the last tranche of your surplus funds as spending money, whether that is for going out socialising with friends, buying new clothes or other leisure activities. It’s important to recognise that we all need to enjoy a little treat from time to time. Creating a budget which denies this is unrealistic, and means you are less likely to stick to it in the long run
Once you have a clear idea of where your money is ending up each month you are in a position to start to create your budget plan.
The first step is to set out the goals or aims you hope to achieve with your budget, both in the immediate future and in the longer term. Start off by setting out the goals you have in mind for your budget. These should be short-term, such as having a bit more extra cash each month, as well as more long term goals like saving up a deposit to enable you to buy a house Long term goals are important when setting a budget as they give you an incentive to stick to the plan even when times are a little rough.
Don’t worry if you are not an ace with figures. Accuracy is of course important but at the end of the day you don’t have to be a maths boffin to create a sound budget. If it makes you feel more comfortable, you could always draw up your budget plan with the assistance of one of the simple-to-use budgeting software packages for your computer They will help make drawing up your budget so much easier. What’s more they are not expensive, so you won’t blow your budget by investing in one!
Set out a note of regular unavoidable expenses that arise every month You should already have a good idea of these from the examination of your income and expenses to which we referred before . You will end up with a note of the payments you absolutely have to make timeously each month If you do not make sure essential bills like your mortgage or card payments are met as they arise your credit report will be adversely affected and this in turn will have a detrimental effect on the goals you set out in your budget
Once you have established your budget, you need to stick to it and that requires discipline and self restraint.
There is no point denying it - it can often be hard to stick to your budget religiously, and that is where setting out your long term goals can be vital That way if you are having to make sacrifices from time to time, at least you feel you are doing it for a purpose. Here are a few other simple tips to help you stick to the plan:
Keep brief notes of what you have spent each day so that you can check this at a later date . The advantage of doing this is that it makes it easier to see what you are spending money on each week and thus should make it simpler to highlight any areas where savings could be made In time , it will become second nature and something you will probably become aware of without the need formally to record it.
Your plan should already have made provision for a few nights out during the month, living it up with friends and loved ones. Just make sure you don’t blow you budget when you are socialising by leaving any plastic cards at home, out of harms reach. Are there areas you can cut back on? You may have certain regular outlays that you can trim. Say, for instance, you use a gardening or home cleaning service like Proclean Domestic Cleaning Glasgow. - see their website here for instance: http://proclean-glasgow.com/domestic-cleaning or facebook site: https://facebook.com/procleandomesticcleaningglasgow. The thing to try to concentrate on is more the recurring payment that become a drain on resources. Perhaps you could change the frequency of their visits so they come once a fortnight, instead of once a week. Small changes like this can add up over time. The same applies to regular office cleaning too, with firms such as Servicemaster - http://www.servicemasterofficecleaning.co.uk/find-your-local/franchise/10700/strathclyde-south/
Don’t take your money out from your bank account several times each week. Instead, check your budgeted spending money for the week ahead and withdraw it in one fell swoop at the start of the week There is nothing to beat a rapidly dwindling amount of cash as the end of the week approaches, to focus the mind on your spending habits.
The last thing to say about budgeting is that we all tend to slip up from time to time It is only human nature. The important thing in these circumstances is to make sure it is just a temporary blip and to get back into the run of things as quickly as you can. If you have a major problem there are a few alternatives out there if you need access to cash quickly. Some are better than others. Your bank may be able to help out short-term or you may get the help you require from a payday lender. If you go down this route make sure you choose a reliable reputable firm because there are many charlatans around. Another decent alternative is your local credit union. Hopefully, however, having got to grips with budgeting, these will be very much for emergencies only!
Preparing a budget is not necessarily complicated, but will require you to devote a little time to the exercise to get it right
The starting point should be to determine how much your income is each month If you are an employee this should be simplicity itself - have a look at your wage slip and take a note of your net pay each month after deductions
If you work for yourself this may not be quite so straightforward because for most self employed people their incomes varies each month A good idea would be to quantify your income based on an average over, say, six months .
You also need to take note of other sources of income you may receive, like interest on capital or any other receipts due to you The most important thing is that you should look at your income frankly and objectively because it is the starting point for your budget and any inaccuracies here will affect everything else .
Next up, you need to examine closely your spending habits to identify regular outgoings. Work out how much you are committed to pay each month on unavoidable recurring expenses such as your mortgage or rent, heat and light, car expenses - if you have one - and any other regular costs you incur each month. It is essential that you can identify where your hard-earned money goes each month to enable you to create a successful budget
The next step is simplicity itself - simply subtract your outgoings from your income to see where you stand. If the answer you get is a negative number, you will need to take action wuickly to prevent getting into debt So, why not now?
With a bit of luck the calculation will produce a surplus amount due to you, in which event you will have to give some consideration to what you should be doing with the windfall.
It is probably a good idea to divide any such additional monies into three areas In the first instance you will want to put aside some of the excess to meet unforessen expenses such as an unexpected repair to your car or a household repair Next, it is a good idea to allocate some of your surplus to regular savings. In the first instance these savings will be a useful supplement to your contingency fund as referred to above, but after you feel you have a comfortable enough buffer against contingent expenses, you can consider savings for investment purposes.
Lastly you should set aside the last tranche of your surplus funds as spending money, whether that is for going out socialising with friends, buying new clothes or other leisure activities. It’s important to recognise that we all need to enjoy a little treat from time to time. Creating a budget which denies this is unrealistic, and means you are less likely to stick to it in the long run
Once you have a clear idea of where your money is ending up each month you are in a position to start to create your budget plan.
The first step is to set out the goals or aims you hope to achieve with your budget, both in the immediate future and in the longer term. Start off by setting out the goals you have in mind for your budget. These should be short-term, such as having a bit more extra cash each month, as well as more long term goals like saving up a deposit to enable you to buy a house Long term goals are important when setting a budget as they give you an incentive to stick to the plan even when times are a little rough.
Don’t worry if you are not an ace with figures. Accuracy is of course important but at the end of the day you don’t have to be a maths boffin to create a sound budget. If it makes you feel more comfortable, you could always draw up your budget plan with the assistance of one of the simple-to-use budgeting software packages for your computer They will help make drawing up your budget so much easier. What’s more they are not expensive, so you won’t blow your budget by investing in one!
Set out a note of regular unavoidable expenses that arise every month You should already have a good idea of these from the examination of your income and expenses to which we referred before . You will end up with a note of the payments you absolutely have to make timeously each month If you do not make sure essential bills like your mortgage or card payments are met as they arise your credit report will be adversely affected and this in turn will have a detrimental effect on the goals you set out in your budget
Once you have established your budget, you need to stick to it and that requires discipline and self restraint.
There is no point denying it - it can often be hard to stick to your budget religiously, and that is where setting out your long term goals can be vital That way if you are having to make sacrifices from time to time, at least you feel you are doing it for a purpose. Here are a few other simple tips to help you stick to the plan:
Keep brief notes of what you have spent each day so that you can check this at a later date . The advantage of doing this is that it makes it easier to see what you are spending money on each week and thus should make it simpler to highlight any areas where savings could be made In time , it will become second nature and something you will probably become aware of without the need formally to record it.
Your plan should already have made provision for a few nights out during the month, living it up with friends and loved ones. Just make sure you don’t blow you budget when you are socialising by leaving any plastic cards at home, out of harms reach. Are there areas you can cut back on? You may have certain regular outlays that you can trim. Say, for instance, you use a gardening or home cleaning service like Proclean Domestic Cleaning Glasgow. - see their website here for instance: http://proclean-glasgow.com/domestic-cleaning or facebook site: https://facebook.com/procleandomesticcleaningglasgow. The thing to try to concentrate on is more the recurring payment that become a drain on resources. Perhaps you could change the frequency of their visits so they come once a fortnight, instead of once a week. Small changes like this can add up over time. The same applies to regular office cleaning too, with firms such as Servicemaster - http://www.servicemasterofficecleaning.co.uk/find-your-local/franchise/10700/strathclyde-south/
Don’t take your money out from your bank account several times each week. Instead, check your budgeted spending money for the week ahead and withdraw it in one fell swoop at the start of the week There is nothing to beat a rapidly dwindling amount of cash as the end of the week approaches, to focus the mind on your spending habits.
The last thing to say about budgeting is that we all tend to slip up from time to time It is only human nature. The important thing in these circumstances is to make sure it is just a temporary blip and to get back into the run of things as quickly as you can. If you have a major problem there are a few alternatives out there if you need access to cash quickly. Some are better than others. Your bank may be able to help out short-term or you may get the help you require from a payday lender. If you go down this route make sure you choose a reliable reputable firm because there are many charlatans around. Another decent alternative is your local credit union. Hopefully, however, having got to grips with budgeting, these will be very much for emergencies only!