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Why should I budget? |
Budgeting - First Steps |
Budgeting - The Nitty Gritty |
Budgeting - Moving On |
Budgeting - Tips |
Tools of the trade |
Budgeting - The Nitty Gritty | |
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If you are going the whole hog and want to try to manage your money better with a budget, a good place to start is to write down all your necessities and your commitments. Try to think of EVERYTHING that you are absolutely committed to paying - things like loan repayments, rent, insurance, utility bills, food etc. Try our budget sheet for ideas. These should be the things that you are legally obliged to pay, and the things you need to pay/buy to put a roof over your head and feed yourself. | |
When you receive your salary on payday deduct immediately fixed payments from your salary on your budget sheet, or you might want to actually transfer the amount into a separate account from which these are paid, leaving your own money available for you to draw on. This will leave your money for the items mentioned above safely tucked away in an account which you do not access for other expenditure, safe in the knowledge that the funds will be there for when they need to be paid. Automating this process means you get used to automatically budgeting for your bills. If you can make this account fully automated so that all your bills are paid by standing order or direct debit then this will aid you in meeting your commitments. |
CHALLENGE 2 : List your financial obligations - the things that are most important, things like rent, mortgage, insurance, credit card and loan repayments, utility bills, and food. |
Planning to meet the expenditure in these categories is the first step towards better financial management. |
Here's some advice if you find you are having trouble meeting your financial commitments. |
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Once you have done this your mind should be clear to concentrate on your other expenditure. Usually, getting control of this expenditure is the biggest single difference you can make to your financial health, and if you can place all of your concentration on this specific section of your finances rather than having to juggle monthly bills you can make great improvements in your financial position. |
Identify all your other expenditure categories according to priorities then determine the exact amount you spend each month how important that expense is, and whether it is necessary. You will then notice the unnecessary expenses, and potentially use the money you've saved in more rewarding ways. |
CHALLENGE 3 : List your remaining financial expenditure categories and plan the amounts you would like to allocate to these whilst not exceeding your income. Try not to make the categories too specific, 8-12 might be a good starting point. Any surplus should be allocated to savings. Monitor your spending in these categories over the month and try to keep to the totals you have set. |
Soon you will be able to identify which categories are consuming most of your income and which of your targets you are finding most difficult to meet. The best starting point is to concentrate on these categories, perhaps the one with the most spending. Be accurate and honest about how much you spend because if you write down less than you actually spend it will be harder to cut back. |
Get Adobe Acrobat Reader to view our sample budget sheet.