Finances aren’t an easy thing to manage and there will be times when it seems like you’re stuck in a rut. When you face a financial emergency, you could look at things like a payday loan so you can have the funds immediately. However, you might be thinking of getting your finances together and start looking after them more efficiently.
One of the best ways to do this is by creating a budget, and it’s actually a lot simpler than you think. So, here are 6 easy steps to help you make your very own personal budget and get your finances back on the right track.
1. Get All Your Information Ready
The first thing you need to do is gather all the financial information you’re going to need to create the budget. This could be months’ worth of bank statements or logging in to your internet banking. Whatever method you choose, you need to ensure you can easily see all your income and spending easily.
This way you’ll be able to work through your budget without confusion or missing anything. You don’t want to get halfway through and realize that you’ve forgotten about one bill that comes out each month, throwing your entire plan so far out of whack. Collect everything you need, which includes a calculator, and you’ll find it a lot easier to plan out your budget.
2. Figure Out Your Total Income
The next step is to calculate your actual income with and without your outgoings. First of all, you need to know how much money you have coming into your accounts and on what days. Once you have this total figure, you then need to collate all your outgoings and deduct them from that number.
The number that you’re left with is the amount of spending money you now have to work with and create your budget. You need to make sure that you calculate this number as accurately as possible as it’s the deciding factor in your budget, so any small mistake could throw it off completely.
3. Assess Your Spending
Once you have your spending money amount, it may seem smaller than you thought. However, you can increase by simply assessing your monthly spending. For instance, if you’ve got 4 online streaming service subscriptions, you could cut it down to 3 or even 2. Things like gym memberships can also be very expensive, so try shopping around for somewhere cheaper if possible.
Another thing to watch out for is your food shopping. It’s easy to fall into a routine of always visiting the same shop and buying whatever you fancy, but this method is damaging your wallet more than you know. Try to shop at less expensive supermarkets if possible. If there aren’t any around you, try utilising the offers that your local ones have instead.
You can also plan what you’re going to buy before you go. It may seem trivial but having a shopping list and sticking to it is the best way to save money when food shopping. Your food shop doesn’t have to take up the majority of your budget. Instead, it should be factored in but still leave you with plenty of money at the end of the month.
4. Create Your Targets
Now that you’ve got the amount that you can create a budget with, it’s time to set your targets. Think about how much money you want to save and how much you’d like to spend each week. However, you need to ensure that these targets are realistic. If they aren’t it will be impossible to stick to them, making your budget worthless.
Tailor your targets to specific times of the year as well. When it’s your loved ones’ birthdays, you’ll probably need to spend a little more or around the holiday season, you may have to increase your budget slightly. Your targets should aim to keep you on track and enable you to save more money. But making them too strict also makes them unattainable.
5. Decide On A Savings Amount
If you want to create a budget to help save money, then you need to think about how much you actually want to save and give yourself a deadline. Budgeting needs to be specific in order to work, so factor your saving into your targets.
Again, don’t try to save too much if it puts you at a disadvantage for the rest of the month. Sometimes saving little and often can be more effective. Instead of purchasing a coffee every morning, try cutting down and popping what you would have spent into your savings. It might not seem like much, but it will soon add up.
6. Review It Regularly
The final step in creating a budget is to make sure that you review it regularly. Your circumstances may change throughout the year for better or for worse, so it’s crucial you reassess them periodically. For instance, if your income has decreased, you don’t want to be living within the same means. Adjusting it to always match your income and current situation will enable you to stick to your budget and always manage your finances efficiently.
Budgeting can seem scary at first because you might think you’ve got to live on the bare minimum and never go out again. But this is actually far from the truth. A budget should restrict your spending, but it should also still allow you to do the things you enjoy, just maybe less often. A budget should fit into your life with ease and not make you feel miserable.
After a week or so, budgeting will feel natural to you, and you’ll wonder how on earth you ever got by before. So, if you’re wanting to improve your finances and save more money, try following these 6 steps to create a budget of your own. You’ll soon see the difference it can make to your life and your bank account!