You Need a Budget! Setting a budget is absolutely vital if you want to take real control of your finances.
If you really want to get on top of everything money-wise, the first step is to know exactly what you have coming in and going out. It’s entirely down to personal choice how you do this. Spreadsheets are a popular way to stay in control and once they’re established you can quickly change the figures as the bills fluctuate from one month to the next.
I’ve put together a handy budgeting document which should really help get control over your finances, you can access the document and download a FREE COPY here – My Money Cottage Monthly Budget Planner. Fill this in as honestly as you can, check over your bank statements to get recent figures for things like water, gas and electric so that you know the latest payment amounts. This will help to make your budget as accurate as possible.
Personally, I have a list of all my monthly bills stored in the Notes section of my phone. I’ve totted these all up so I know the total figure that’s going out. For the ones that fluctuate, I tend to overestimate so that I’m not stuck to pay the extra.
Once you know the cost of all of your bills, you can work out how much “extra” you’ve got left over for all of your other spending. Decide whether you’re going to work monthly or weekly. How much will you have coming in for that period? What will your outgoings be? Anything left over is yours to spend on food, petrol, clothes etc. If you don’t want to go into the red, you need to keep track of all of your spending and deduct it from your total as you go. Note every single purchase, no matter how small. For example, if your weekly budget is £100 and you’ve just bought a pastie for 99p, you’ve got £99.01 left for the week. Doing this will allow you take a real hold over just where your money is going.
I now have two current accounts, one purely for bills and one for food, clothes and general spending. At the end of the month the wages go into the billing account. I leave in enough to cover the bills and the rest gets transferred out to the “spending” account. This ensures that the bills are always covered and I don’t need to worry about the direct debits coming out.
Budgeting to me doesn’t mean being stingy or mean, it’s just a sensible and vital way of taking control of your finances. Once you have a firm grip of your budget, you may be able to start saving regularly too and accounting for this by deducting it from your spending allowance.