With rising inflation, you may have found yourself looking more closely at your household budget, prioritising where your hard-earned income and savings should be spent. Whether you are running a monthly deficit or surplus, budgeting is a crucial tool in understanding exactly where your money is going, helping you ensure it is working in the best way for you.
Below, we have compiled a number of tips to make the most of your own budgeting.
If the idea of budgeting sounds daunting, start with a simple spreadsheet of all of your known expenditure. This will include costs that are easy to ascertain – think utility and food bills. Once you have this, you can start to add costs that are trickier to determine, for instance personal grooming and holidays.
Using a spreadsheet will allow you to total up costs quickly and amend figures as your circumstances change. Your budget should be a working document that you consult and adapt regularly, maintaining its accuracy.
Work up to Including Everything
Eventually, your budget should include everything – from large to small expenses. This will help ensure it is an accurate reflection of your finances.
This also includes anything that a partner pays for, even if you keep your affairs separate, to show your expenditure as a household.
Don’t Forgot One-Off Costs
Remember to include discretionary expenditure, or at least an assumption for this. One-off costs (such as car insurance, building work, Christmas/birthday costs) should be accounted for so that the cash is available when such things crop up. Savings for this type of expenditure could also be held in a separate account to help limit overspending. This might also help you to fund things like car insurance on an annual rather than monthly basis, reducing the overall cost.
Save First, Spend Later
It might seem obvious to spend each month and save anything leftover. However, this can make saving optional. Alternatively, understanding how much you can afford to save each month means you can move this away from a main account to a separate savings account on the first of the month. Again, this helps prevent overspending.
Factor In Some Fun
Adding a little wiggle room for something fun, like a cinema trip or coffee with a friend, can make it easier to stick to your budget in other areas. Budgeting isn’t short-term; think of this like a cheat day for your finances.
Ask For Help
If you are just starting out with budgeting, it might be helpful to ask those around you to give you an idea of some of their costs. This can help you to start planning while you are figuring out your actual spending habits, for instance if you are just starting out on your own.
Of course, we are also happy to offer our clients a helping hand with their budgeting. If you have any questions on the above, or would like any more information, please contact one of the team.