A 4-Step Guide To Creating a Budget
In order to take care of your finances and make sure that you’re only ever living within your means, then setting and keeping to a budget is really important. It might not be the most glamorous thing in the world, but it is really important if you want to take charge of your finances, look to improve your credit rating, and look to save money too. So here is a step by step guide to budgeting, with all you need to know.
Know Your Income
Sit down and work out exactly what money you have coming in each month. There will be income from your main wage, as well as the income from any investments or earnings each month. If you look after a friend’s child for a couple of hours each week, then add that all in too. So be careful not to leave anything out if you want to create a realistic and precise budget.
Work Out Fixed Monthly Expenses
Next comes working out what your fixed monthly expenses are. These are the kinds of thing that you have to pay each month. So include your household bills, fuel, car payments, mortgage or rent, insurance, groceries, and include any debt in this too; you’ve still got to pay those! Though if you’re looking to repair your credit, then you could click here for info on the best ways to do just that. If you’re not sure what your payments are, then check your accounts and bank statements over the past couple of months so you know what you are paying and when.
Set Some Goals
From your income and then your fixed expenses, you will have an idea about what you have left to ‘play with’ each month. But before you start deducting money for clothing or entertainment, then it is a good idea to plan out what your financial goals are. They could be to save a certain amount of money each month to save for a home deposit, or to pay off more of your debt each month. So decide what you are going to do with the money that you won’t need for expenses.
Any Discretionary Expenses?
From month to month, there will be things that come up that you need money for. School trips, a new coat to replace an old one, or a trip to the movies, for example. They all need to be budgeted for. So look at what you have left after your main expenses have been paid and your savings have also been put to one side. How much do you have left? When you know what is left, it can stop you from overspending.
From there, it is just a case of implementing your budget and seeing how things go. If you have budgeted for more than you need for your groceries, then adjust accordingly and save more each month perhaps. The important thing is to be on top of your finances so you know what you can and can’t afford and can keep within your means.