Good financial planning requires time and effort. While in an ideal world, we’d be able to keep on top of our finances at the click of our fingers, in reality, money management requires some careful planning and consideration.
Budgeting can be an extremely useful financial tool – particularly in financially tight times like these, when we’d all do well to keep a close eye on our spending habits. When we’re busy with our everyday lives – working, doing household chores, taking the kids to school and back, etc. – finding time to sit down and draw up a budget that works isn’t always easy.
However, the rewards of successful budgeting can really be worth the effort. With that in mind, let’s take a look at some simple budgeting steps that you could take.
Budgeting: the straightforward way
‘Speed’, ‘ease’, ‘convenience’: they’re all words that we prize, and wish we could benefit a bit more from in our often time-poor, highly demanding modern lives.
There are steps you could take to make budgeting work more efficiently for you – and the time spent on drawing up a carefully thought-out budget could be time ‘saved’ when it comes to managing your finances for the future.
The basic idea of budgeting well is to accurately work out just how much money you have available from month to month – along with how much you spend and what exactly it’s spent on.
To draw up a basic budget you’ll need to work out a) how much you earn/receive per month, b) how much your total essential outgoings cost (rent/mortgage, food, bills, etc.), and c) how much ‘disposable income’ you have (you’ll work this out by deducting your total outgoings from your total income).
Your disposable income should be used to repay your unsecured debts each month before you cover any non-essential costs – and it’s always a good idea to put some aside in the form of savings.
However, there are further ways you could improve your budgeting skills. You could think about:
- Taking a double-account approach to budgeting. By dividing your bill money from your spending money with a budgeting bank account alternative, you should be confident that all your essential costs are safely covered every month.
- Keeping a regular eye on your bank statements to track any changes in your spending habits.
- Cutting out any non-essential items in your budget that you feel you don’t really need – and aren’t really worth the expense.
Taking some time out now to budget in the best possible way could really save you falling into financial problems further down the line – so find a way that works for you, and keep it up!
This article was written by Ian Williams – who when not sailing with his children or running around after them like a maniac, is a personal finance advisor and has been advising people on their monthly budgets for many years.