Most of us will never have the huge sums of money we desire, but with careful planning we can make the money we have stretch to cover all the things we wish to do. In order to accomplish this, though, it is important to create a manageable budget and, most importantly, stick to it. The following article will outline how to create a budget that will suit you and allow you to buy that extra pair of shoes or take a holiday without feeling guilty about it.
The first step is to identify exactly how much money you have coming in each month. Don’t forget, however, that it is important to remember to remove items such as taxes, pension and NHS payments and focus solely on the take home pay. Once this is sorted out, it is then important to begin tracking all your spending. Start by writing down all the fixed expenses such as rent, mortgages and utility bills. You probably won’t be able to cut back on any of these, so it is important to know how much of the overall income they actually consume. Then the variable expenses such as petrol, entertainment and food shopping can be listed. These are areas where cuts can possibly be made.
Once all the outgoing expenses have been noted down, it is time to set a goal. These can be both short and long term goals. Short term should only span a year, while longer goals can encompass retirement plans or child education, depending on your specific needs. These goals can change, though, and should represent more of a flexible aim, as opposed to being fixed in stone. Plans will then need to be made and decisions arrived at as to where cutbacks can occur. It is important now to determine those items that are needed and those that are not. This may require adjusting one’s lifestyle and this may take a little getting used to.
Even when a budget is created, it can be modified, and it is important to check on a regular basis that you are focused on and following the budget correctly. Raises, increases in expenditure or even achieving your goal may affect the way you look at your budget further down the line.