Planning ahead is crucial when it comes to your finances. While tracking will show you what you are spending your money on right now, planning and budgeting will help ensure that you have enough money for the things that are important to you in the future – like a child’s birthday or an anniversary.
Taken from our downloadable eBook: Improving Your Financial Health: 8 Money and Credit Management Tips, our guide to Budgeting Tips – Managing a Personal Budget highlights a number of tips for ensuring your finances remain in great shape.
Setting a Personal Budget
When you begin setting out your personal budget, it’s important that you start by taking into account a few key points:
- Breakdown costs: It’s always easier to draw up a budget when you have a clear picture of where your money is being spent. Breaking down your monthly outgoings by areas such as rent, utilities and shopping will help show you where your money is being spent, what you should have left and where you could be saving.
- Plan your budget: Once all your outgoings have been accounted for, you can then set monthly limits on what you can spend within each area. This will allow you to take further control of your finances and help in achieving those long-term goals, whether that’s a once in a lifetime holiday or saving for retirement.
- Don’t forget, your budget is likely to change on a month by month basis as you need to consider such occasions as Christmas celebrations and summer holidays. Using a finance calculator can be a great way of adjusting your budget when faced with regular changes.
- Cut costs: The vast majority of those people budgeting are doing so in an effort to save money, so finding areas in which costs can be cut is one of the most important parts of the process. Look over your budget and consider whether you actually need that gym membership or Netflix subscription, as cutting these will add to money saved at the end of the month.
Use our Uncle Buck online finance calculator to help you budget more effectively and find out how much you could cut down your monthly costs.
Why Set a Budget
Saving money needn’t be a painful process and with a flexible budget, you can still be free to have all the things in life that you enjoy alongside other benefits including:
Transparent spending: Creating a personal budget provides you with a clear overview of where all your money is regularly being spent and an insight into your spending habits.
- Reach your goals: The main reason many stick to a budget is to save money to go towards achieving long-term goals. A budget can provide a clear idea of how much you could be saving on a regular basis and the length of time before your goal is reached.
- Stay within your means: As a budget clearly sets out all your earnings and expenses, you should have a clear idea of how much you can actually be spending every month. This should ultimately make living within your means and avoiding debt a much more manageable process.
Manage Your Budget
Once your personal budget has been set out, making sure you stick to it is where the hard work begins. Managing your new money-saving plans can be tricky, but there are a number of helpful tips for making it a success.
Use a cash budget: If you worry you might go over your allocated funds within a month for a particular area, then taking out the allotted money from your account as cash can help. Having a cash budget rather than using a debit or credit card will ensure that when the money is gone, it’s gone.
Use a finance calculator: A finance calculator can be a great way of organising your personal budget, especially if your income changes month from month.
Budget together: If you and your partner are planning to save simultaneously, then budgeting together can be a real help. Having someone to keep you accountable for your spending will help to keep that budget on track.
Regularly revise: Life changes, and when it does, so should your budget. Changes such as a wage increase should always be accounted for, and while it may be tempting to splash the extra cash on frivolous purchases, re-calculating your new budget with a finance calculator is often the smarter approach.
A well-thought-out personal budget can be one of the more productive and straightforward ways of keeping track of your spending and savings. If you want to learn more great money saving tips, then download our eBook Improving your Financial Health: 8 Money and Credit Management Tips now.
Alternatively, if you have a question and want to get in touch, you can contact Uncle Buck at firstname.lastname@example.org