Why should you have a budget?
- Stops you from overspending without realising (those small expenses all add up)
- Helps you identify where your money is going
- Reduces stress by making sure you have enough for the important things
- Helps you direct your money towards the things you really care about
Don’t deprive yourself. If you try to be too strict, you’re only setting yourself up for failure and disappointment. If you like to go out for a drink after work, don’t eliminate this expense, just set yourself a limit of how much you can spend. Part of the purpose of a budget is that it allows you to cut back on the things you don’t care about and fund the things that you love.
Work monthly (or however you usually get paid). Start by writing down a list of all your essential expenses. This will include rent/mortgage, bills, food, travel etc. Calculate the total cost of these non-negotiables.
Now add in the middle ground. These are expenses like a Netflix subscription - not totally essential but not an extravagant splurge either.
If you struggle to make these lists, you can try having one month where you change nothing but record all your purchases to see where your money is going. There are many apps that will categorise everything for you.
1. Record your regular payments (rent, bills, phone) and any direct debits.
2. Include a reasonable estimation for any loan repayments, credit card payments and savings.
3. Give yourself a realistic budget for less predictable amounts such as groceries, entertainment and eating out.
4.Estimate your income for the month and subtract your totals for 1, 2 and 3. Do you have enough to cover it all?
- What are your financial goals for the month? Are there any areas that you are spending way more than you thought you were? What can you cut back on or improve?
Download your free budget sheet here