How to Make a Budget

All kinds of people struggle to keep their finances in order each month, doing everything they can to make their money last until their next pay day while others seem to breeze through each month being able to afford expensive clothes and regular holidays. If only budgeting was the kind of thing that everyone could manage… oh wait.


Making a budget doesn’t have to mean that you cut all of the luxury items out of your life. We’ve all grown up accustomed to certain things depending on our backgrounds and as such we have different values when it comes to money and paying for things. While many will shop in the cheaper supermarkets, others will buy their goods from the more upmarket stores without batting an eyelid at the price.


While our bank accounts may differ, our methods don’t have to. Budgeting is the kind of thing that everyone can do, especially if you plan for the month ahead before it even starts. Plenty of businesses and individuals will employ accountants to take care of that kind of thing for them, advising them on what they can and cannot spend; others are left trying to work that out for themselves and finding a method that works for them.


In this scenario the best place to start is with a pen, piece of paper and a calculator. You then need to take your current balance, the amount you have available to you at that moment. This is going to be your starting point for the month ahead.


Next you need to add up all of your compulsory expenses, the bills which you simply have to pay that month like your rent or mortgage, credit card repayments, mobile phone bills and so on. This will then give you a figure which you can subtract from your current balance to leave you with another figure.


From here you can then count up any additional expenses  you may have, such as the fuel for your car and how much you roughly spend each month in the supermarket or eating out. There are mobile phone apps out there which allow you to count these up and they can provide you with an average monthly expense on these kind of things which can be really helpful.


Having worked out exactly how much you’re paying out each month and taken that away from your starting balance you’re probably left with a very low figure. Don’t worry, you haven’t taken into account your income yet. This is the amount of money you receive as part of your shift schedule or salary and needs to be added onto the figure you have after making your deductions.


This final figure is the amount of money you have ‘left over’ or ‘available’ for the month ahead. Say that is around £300 for example. You then need to divide that figure by the number of days until you next receive a payment, like your next pay day, which may be – for example again – 28 days. By dividing your available money by the number of days you are left with a figure and that is how much you have ‘available’ to spend each day without going overdrawn.
If you can do this every month you’re on your way to financial stability and you’ll soon be saving money – all by working out the kind of things you NEED to spend money on, and cutting out the non-essentials like the daily coffee on the way to work which you could just make when you get in.

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