A budget in its simplest form is a place where you write your income and expenditure down as plan for your week or month (sometimes year).
It’s a good starting point to see where you’re at financially and if you have any money left over (surplus) or worse have a negative amount of money (deficit). You detail all of your income and then expenditure. You minus your expenditure from your income and see what you have left (or not)!
The problem with most budgets is when you create them, you create them with the best case scenario in mind and they’re often too aggressive and not specific enough. Once you have paid all of your bills and put aside some money for fuel or food, everything else goes on paying off debt. You miss the annual expenses, birthdays, gifts and fun money. You then get caught out trying to scrape together money for a gift or even worse put it back on your credit card you’ve just paid off.
I’ve been guilty of this in the past and my budget still isn’t perfect but it’s leaps and bounds ahead of where it once was and I think in a couple of months it’ll be perfect.
So I’ve put together a list of things that I’ve learnt over time which has really helped me out.
Income:
- Only include fixed income that you know is coming, salary, child benefit, any benefits.
- Do not include extra income you think is coming in (extra shifts, overtime). It may not come in.
Expenditure:
- Include all fixed bills, rent/mortgage, energy, car expenses
- Add a section for annual expenses, things you pay yearly. Car insurance maybe? Put an amount aside to make it easier when that bill is due.
- Add a section to save for things you pay monthly that you could pay annually, car insurance if you’re not already paying it yearly.
- Gift fund, cards, birthday presents etc
- Debts, credit cards, loans, car finance.
- FUN MONEY. Everyone needs some down time, do not miss this out. You’ll overspend otherwise.
Optional extras include, big ticket items, new car, house deposit, annual subscriptions.
One you have a starting point, be patient. Your budget won’t be perfect and it takes time to develop and fine tune. The main thing is you start and start today.
Good luck and happy budgeting!