Tip 1 – Find a good reason to budget
If you don’t have a very motivating reason to budget, it’ll feel like a form of torture designed by Mr Scrooge and you won’t last longer than a week.
Which motivation appeals to you most?
- To keep my finances on track
- To get out of debt
- To save towards something important to me
Tip 2 – Start with last month’s expenses
One of the easiest ways to start a monthly budget is to use your expenses from last month as a guide. Gather your bank and credit card statements and write down all the expenses. You can even group them in categories like: home, transport, personal, children, entertainment, medical, insurance etc. Not only is this a quick and easy way to create your first budget but you’ll be able to see what you actually spend your money on – not what you think you spend your money on.
Tip 3 – Create a buffer
Irregular expenses like that annual car repair or property tax or festive season gifts or a vacation are often left out of a budget. Make a list of these expenses and guess how much you’d pay annually for these items. Add them up and divide the sum by twelve and then add this “buffer expense” to your monthly budget. Important extra tip: pay this amount into a savings account every month to keep it safe.
Tip 4 – Adjust and Track
A budget is most powerful when it’s used as a tracking device. Track your spending weekly (if not daily) and make budget adjustments right away to stay on track. Waiting until the end of the month is too late! Lots of little additional expenses often creep into the mix and you’ll need to swap some budget … Read more ...