The past year has been difficult for a lot of us, uncertainty over health and work has brought new challenges and had an effect on our mental health. If you have struggled or are now still finding things a struggle, let’s look at creating some order in that chaos with tips for being successful at budgeting. It will feel like someone has set a reset button for you.
6 Tips for being successful at budgeting
Get organised and take your time
Many will just say, just start! And yes, that is a good theory but you need to do this right from the start so you will need a bit of preparation first. Get together all the paperwork that you need;
- Bank statements (can just be a couple of months)
- Recent credit card bills
- Copies of your household bills
- Details of your savings and pension contributions
- Any other income that you have.
If your income is monthly, make a monthly budget but if your income is weekly or fortnightly, then adjust accordingly to the same time length in budget. With this information you’ll be able to start budget planning.
What’s your income?
Make a note down of your regular income from employment – make sure this is after tax, student loan repayments, pension etc. If you receive any other income then add this to the amount, it might be that you have property that you rent out so you get rental income. As someone who is self employed and my “monthly” wage varies this can be a bit of a challenge but it’s best anyway even if your income does not change much month to month to take the amounts from the last 3 months and then take the average from that.
Calculate your essentials
Now let’s get your outgoings listed, all those essential payments; mortgage, utility bills, food, car, gym. Anything you class as essential needs to be on this list, have a look through your bank statements and bills for all of these. If you get this information for the last 3 months and then take those amounts from your monthly income, you will be able to see what your disposable income is – what you have left over!
What’s your disposable income?
Again for the last 3 months, work out all the other costs you have paid out for that would be under your disposable income; TV subscriptions, going out, savings. You may now have found that you’re spending more than you earn which means you need to tighten up your budget.
This is happening to a lot of us right now with our lockdown spending, I had to do a temporary “emergency” budget before Christmas last year, it prepared me for the slower months just after Christmas and put me in a good stead going into the rest of this year. I got ruthless with some of the additional payments I was doing for TV subscriptions for a couple of months and really meal planned my meals to get my food spend down. It really did work.
Look ahead
Have you got any big expenses coming up that are essential but more of a one-off payment like a car MOT, holiday payment etc. Then you need space in your budget to allow for that. Have a look at your disposable income and start thinking about what you could drop off for a little while to save up for the expense.
A popular ones are to ease how many takeaways you get. At the moment we all know how easy it is to order but the attraction of the offers sometimes can lead us to spend even more than we intended anyway. Once you start looking ahead and being prepared rather than dreading and avoiding, you really will start to take control of your finances again, A big expense to look ahead for is when you need a new car and if you are thinking about doing a payment plan to buy it, check your budget before you buy. This can work out cheaper in the long run, if your car keeps needing repairs.
Looking ahead is really one of the most important tips for being successful at budgeting as you are really having to think ahead for those extra one-off payments. These are the ones we do tend to forget – I’ve done it many a time before!
Time to adjust
Take time each month to assess how your budget is going, make any alterations on big spending in the future and add in any reductions in spending that you have done. It is also the best way to check you haven’t missed anything and got back into overspending.
I used to be so scared by finances but there really is no need to be.
Thanks for reading our 6 tips for being successful at budgeting.
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