Spending within your means or growing your savings can be a real challenge.
But the easiest way to manage your money is to stick to a budget.
If you don’t have a firm grasp of all of your incomings and outgoings, you're far more likely to struggle when it comes to cutting back on costs or putting money away.
Take control of your finances and find out how you could transform your household spending or work your way out of debt.
Here are nine steps to help you create a workable budget and stick to it:
1. Set yourself goals
It's much easier to create and stick to a budget when you know what you want to achieve. Set goals that are specific, measurable and achievable. A specific goal could be a new car, you would then calculate how much you need to save for this car and set an achievable date to complete this.
It can help to keep track of how you’re going in a spreadsheet or budget planner. This could be a spreadsheet or diary.
2. Keep a close eye on your spending
For a new budget to be successful, you need to understand where your spending habits were going wrong before. Before you finalise your plan, spend a month writing down everything you spend your money on.
It may be easier to track your spending into particular categories such as bills, groceries, transport and entertainment. You might be surprised to see where your cash really goes.
3. Compare your income and spending
Now that you know where your money is going, look at how your outgoings match up to your income. Find areas where you can cut back to help balance the numbers. Be realistic about how quickly you can make changes so that you don’t become disheartened.
4. Write it down
Create a written budget like the one below or with the Moneyhound Budget Calculator, to tally up all your expenses and income. This will give you a clear picture of what your expenses are, how much you can afford to spend and any areas where you can cut back.
5. Don't neglect all luxuries
When you're thinking of ways to cut back on your outgoings, don't be overly strict on yourself. It's important to give yourself an allowance for fun items and small luxuries as these can help you stay on track without blowing your budget.
6. Manage your debt
To get ahead, you'll also have to think strategically about any debt you're dealing with. Cutting your spending won’t have the impact you hoped if you're continuing to pay high interest rates on money owed, so look at switching credit cards or consolidating your loans. Make sure you tackle debt with regular monthly payments.
7. Empty your wallet
Get a handle on your spending by leaving your credit and debit cards at home. It's much harder to overspend when you are relying on cash. Also, if you have a strict budget for the day, you can make sure you only ever have that amount in your purse.
8. Don't forget a safety net
No matter how comprehensive your budget, there's always the chance something unexpected might happen. Try and save a small amount of money every month or set an emergency fund into your budget every month to help you deal with unforeseen expenses.
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9. Revisit your budget often
To keep your budget up to date and your enthusiasm high, you need to keep revisiting your budget often. Check how well you're doing on a monthly basis or go over your figures quarterly. That way, you can see where you might need to make adjustments and be proud of what you've achieved so far.
By being realistic and sticking to your budget you’ll be on the path to achieving your financial goals.
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