How to budget without being restrictive

Budget ...

... "a plan to show how much money a person will earn and how much they will need or be able to spend"

STOP!  WAIT!  HOLD IT!  Before you all switch off, this blog will help you establish a budget without being exceedingly boring.  After all, who doesn't want to see their money grow and work for them.  Budget, the very word makes you instantly think of 'going without', 'restrictive', 'imposing' but it doesn't have to be something that rules your life if you set it up in the correct way.

You've probably guessed from the first paragraph that we're following on from last week's blog of saving money and surviving January.  A few basic and obvious things to think about when it comes to budgeting ....
  • Do not spend more money each month than you earn - duh, obviously, but it's oh so easy to use credit cards to make up any difference - DON'T under any circumstances!
  • Great, you're earning a good salary so you deserve those little treats don't you?  Not ALL the time.  DON'T slip in a 'luxury' lifestyle.
  • DON'T ignore checking your bank balance until the end of the month.  Keep a good track of what's going in and out by checking at least once, if not twice, per week.
  • Savings don't just happen.  Make them happen by transferring a set amount from your current account into a savings account every time you get paid and enjoy watching it grow.
As I said, obvious, but we're all guilty of straying from the path of sensibility every now and then.


Setting up a simple budget:
  1. Make a note of all sources of income (after tax), which in most cases will simply be your monthly pay.  Total this up.
  2. Make a note of ALL your expenditure, every solitary thing including items you're likely to forget apart from the very obvious mortgage, rent, heating, shopping etc.  What are your 'luxury' spends?  Beauty treatments, subscriptions?  Note them all down.
  3. Ok, what have you got left?  This is the leftover money that can be put into a holiday fund, new car fund, additional pension payments, etc.
Keeping track of your budget doesn't have to be complicated as this demonstrates, you can make it more complex as you go along but keep it simple to start with.

A few questions to ask yourself:

Let's go a little bit further with this and bring some life and meaning to your budget by answering a few questions:
  • List any purchases you made last month that were completely impulsive.
    • Did any of these purchases have real long-term value or were they things that quite honestly you could have lived without?  
  • How much money did you spend on meals and nights out last month?
    • Were these all planned in advance and budgeted for? Or impulsive after work drinks that got out of hand and next thing you'd spend £50+? 
  • What item(s) are you currently saving up for?
    • How much do you need to save each month to purchase this item in the least amount of time possible?
    • Are you on-track with these savings or is there more you can do (see above!)?

HAPPY BUDGETING!!

#2020

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