How to budget effectively
With the cost-of-living crisis upon us, it is getting harder to make our wages go as far as we would like. The best way to stay on top of your bills is by creating a budget and sticking to it. Not only will this give you peace of mind as you know you have enough funds to pay your rent, council tax etc but you will be able to treat yourself to something special, a night out or holiday. without feeling guilty as you know you have the means to pay for it.
A budget is not as daunting as it sounds – it really is a question of adding up your income and your outgoings and deciding what to do with the rest.
Add up your income
Anything that comes into your account on a regular or irregular basis.
Calculate your spending
This is a great way to find out where your cash goes. Your categories could include rent payments, utility bills, groceries, childcare and travel.
Review your disposable income
Now onto the fun bit – working out how much disposable income you have and how to spend it.
Take a look at how you have previously spent your disposable income which will prevent you from under or over-budgeting in certain areas.
Draw up a budget you can stick to
Use your average earnings and compulsory spending figures for the past three months to work out how much disposable income you’ll have in future months, adding in any one-off payments you know are on the way. From there, you can set a reasonable budget for your disposable income, along with achievable savings targets.
Now you have all that information you can go ahead and create your budget.
Review your budget regularly
As we all know, things change – salary go up, rent goes up etc – so make sure you review your budget every six months.