How to Budget Your Money
All sucessful busineses have financial planners to keep the cash flow plans & goals under control. Treat your life as if it were a business.
A money plan is called a budget and it is crucial to get us to our desired financial goals.
Without a plan we will drift without direction and end up marooned on a distant financial reef.
If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what your joint financial goals are.long term and short term. Then plan your route to get to those goals. Every journey begins with one step and the first step to attaining your goals is to make a realistic budget that both of you can live with.
A budget should never be a financial starvation diet. That won't work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending.
Even a small amount saved will help you reach your long term and short term financial goals. You can find many budget forms on the internet. Just use any search engine you choose and type in "free budget forms". You'll get lots of hits. Print one out and work on it with your spouse or significant other. Both of you will need to be happy with the final result and feel like it's something you can stick to.
Before you can do any financial planning, it is important to examine your income and your expenses. When you spend more than you earn, you are heading for financial disaster. Calculate every cent you spend daily, no matter how small it is. Everything adds up.
Calculate your regular income. Include that of your spouse also, as well as regular income from other sources. Make a list of all income sources and amounts. Do you receive regular overtime or a large bonus? Is it guaranteed? Can you calculate average amounts by using past bank statements or pay slips? Try to be accurate and get to an average 'net' (after taxes) income.
Write down every daily expense no matter how small the amount Calculate your regular expenses. Save all receipts and expenses for one month. Ideally, you need to carry around a pen and small pad with you for one full month. Write down every amount you spend, what it is for and where you spend it. Much of the spending will be on large, regular items (rent, utility bills and grocery shopping, for example), but there will probably be many small regular items too (newspapers,magazines,coffee shops, snacks, haircuts and entertainment)
Look at the figures. Money coming in (income) and money going out (expenses). If your
I know this is boring, and often an unpleasant job to face reality, but unless you know exactly where you are, how can you begin to improve things.
OK, now we have a budget, we can start to find ways to get the balance correct. This is for me
You will be shocked at what the itty-bitty expenses add up to. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.
That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.
If we can get control of the small expenses that really don't matter to the overall scheme of our lives, we can enjoy financial success.
The little things really do count. Cutting what you spend on lunch from five pound a day to three pound a day on every work day in a five day work week saves £10 a week. £40 a month. £480 a year. £2400 in five years..plus interest.
See what I mean. it really IS the little things and you still eat lunch everyday AND that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of places to cut expenses if you look for them.
Set some specific long term and short term goals. There are no wrong answers here. If it's important to you, then it's important period.
If you want to be able to make a deposit on a house, start a college fund for your kids, buy a sports car, take a holiday, then that is your goal and your reason to get a handle on your financial situation now.
