At the foundation of any financial plan, there is a budget. Regardless of if you live from payday to payday or earn six-figures, it’s important for you to know where your money goes. Budgeting has a bad reputation for being something that restricts you and stops you from spending money, however, it’s more about understanding exactly where your money goes each month.
A good budget will make sure you stay on track so let’s have a look at some great tips you should be following:
Creating Your Budget
This is the hardest bit. You may find yourself staring at a blank piece of paper not knowing where you should start. You don’t need to worry though, it’s not as complicated as you may seem. You need to start with the most important bills, add in any priority debts, and then add in your luxuries.
How To Succeed
Once you have sat down to create a budget, you need to then make an effort to follow it. You may feel as though you going on a bit of a diet, you will start with great intentions, then possibly drift away from your plan. Try not to let this happen, remember you can always rework your budget if it’s not working for you.
Be Mindful Of Overspending
One of the main reasons you should create a budget and stick to it is so you can keep track of what you are spending and what on. When you stray from your budget the cause is usually because you are overspending, even if you have a budget to tell you how much you should be spent. It’s important for you to think about the reasons why you are overspending. Is it regularly in the same area? Perhaps you need to add more to your budget for your EE top-up credit because you need it for working from home because of Coronavirus?
Automate Your Savings
This is a really useful tip. If you start to treat your savings as a monthly cost on each payday you are much more likely to succeed with your savings goal. Set up regular payments to automatically leave your account on the day that is ideal for you (usually payday).
Outline Your Savings Goals
If you are going to save you need it to be for a reason. Saving for the sake of saving never seems to work. Whether it’ towards your pension or student fund, for home renovations, your first deposit for a home, or for something like a holiday. You will be more motivated if you set yourself a target. Think about what you would like to achieve and either set your savings amount based on the amount you need to meet your deadline or set your deadline when you will reach it from what you can afford to save each month.
These tips should help you to start budgeting successfully. Remember a budget is about watching your money not restricting you.
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