How to Budget Effectively
Many people live each month waiting for payday to come around. But what if you could budget for each month ahead and relax knowing everything is accounted for? Here are some tips to help budget more efficiently.
Know what you are working with
In order to budget effectively, you need to know exactly how much money you have to spend and where each amount is going.
Write down your net pay (amount you get paid after tax, National Insurance and other deductions e.g. student loan or pension plan) and minus all the household bills, this will ensure that all your bills are paid for and you don’t end up with any default payments or panicking towards the end of the month while waiting for the next payday! More importantly it allows you to see what you have left after the most important things are accounted for.
Account for Non-Household Expenses
Make a list of everything you know you will have to pay for this month which isn’t a household bill, things such as gym memberships, food shopping, petrol, clubs or activities you attend. This will then allow you to see what money you have left over with both the household bills and other necessities are dealt with. This is known as your ‘disposable income’.
Keep Track
It might be a good idea to keep an eye on how much you are spending per month to get an idea of where your money is going and if you needed to, what you could cut down on. In addition, keep an eye on things that are coming up in the future months. For example, if your car is due its MOT or service, this needs to be in your plans to avoid any surprises. There are apps which can help you track your spending as well.
Needs Vs Wants
When budgeting for the month ahead, it is a good idea to write down everything you pay for in each month and whittle each item down to what is necessary and what you can live without. This way you have an idea of how much you need to spend on things such as food and petrol and stick to that figure as much as possible! You might even be able to save some money too.
Plan your Meals
This is a really good way to know roughly how much your food shop is going to cost per week or month. It also saves the stress of figuring out what you want for dinner each evening and avoid purchasing takeaways!
Book Activities in Advance
Budgeting doesn’t always have to mean missing out on fun days out with family and friends. You can still book these in advance to make sure you account for the money being spent. Whether you physically book something in advance (which could actually save you some money) or make a note that it is happening, don’t leave it until the last minute and panic!