A solid budget should be at the base of every financial plan, no matter if you earn six figures a year or live pay check to pay check. Contrary to popular belief, budgeting isn’t all about restricting what you spend and cutting out the fun. It’s all about knowing how much money you have, where it goes, and allocating properly to help you make the most of your funds. In this post, we will be detailing a few tips to help you create and maintain a budget for your personal finances, starting from the basics and taking it to more advanced levels.
1. Make a simple budget
Your budget doesn’t need to be shiny and amazing with all the bells and whistles. It just needs to contain enough information that is easy to digest and understand. Use your financial statements to add your monthly income, essential outgoings, and other commitments, such as credit card or payday loans repayments. You want to determine fixed and variable expenses to get the best idea of how your balance looks each month, and this will give you the foundation needed.
2. Spot where you can cut back
Sometimes, we spend a lot more than we need to on basic life costs, such as utilities and groceries, but there are plenty of ways to cut back. In terms of your bills, you can shop around or use a comparison site to find providers who offer better deals. It may also be worth considering switching to direct debit, as some providers may offer a reduced price on automated payments. As for groceries, try shopping for more store branded items, and avoid going to the supermarket before eating. You should also make a list and aim to stick to it as much as possible.
3. Use cash
In this digital age, it’s too easy to swipe our cards or use contactless on our phones. This convenience comes at a cost, as it is so quick to overspend, so try to use cash where you can. Take out a set amount for the day or week, and try to stick to only using cash where possible. This will allow you to physically see how much you are spending and where you can cut back. This is a fantastic way to help you keep spending under control.
4. Use budgeting resources
Saving money becomes less of an arduous task when you have the right tools on your side. For example, there are plenty of budgeting apps available that you can quickly access on your phone and track your spending. Most allow you to sync up with your bank and credit accounts so you can truly see where your money is going. You should also consider the best place to stash your savings, whether you have a savings account with your current bank or open one with another provider.
5. Set Realistic goals
Having achievable targets is a key element of any budget. By setting goals that are unrealistic, you could lose sight of your target and veer off track. With manageable goals, you can keep your eyes on the ball and reach your target, potentially a lot quicker than you first imagined.
By following these tips, you should be able to outline your important spending, discover where you can cut back, and watch your savings grow.