If you have been following the Instagram page, you would have seen that budgeting was one of the first topics I wanted to cover. This is because budgeting is the most important thing you can do to align your finances in order to know where you stand. In this piece, I will be identifying the different budgeting areas and breaking them down using my budgeting spreadsheet which will be available for download at the bottom of the page.
So, why should we budget?
Simple question and a simple answer. Because we need to be able to manage our money effectively if we are going to make the most of it and to be more organised, especially if we are hoping to achieve a goal i.e. a holiday, a deposit for a new car, a new TV or even just a specific figure in savings.
First and foremost, we need to look at our monthly outgoings. These should strictly be the any bills or direct debits that are taken from your account on a monthly basis. These shouldn't include anything you spend routinely and leisurely. Just bills and subscriptions.
For example; mortgage, utility bills, car insurance, mobile phone bill, netflix subscription, gym membership, fuel, food shopping, etc.
There are a whole variety of bills and subscriptions that varies between people/couples. We'll refer to the items mentioned in the example above as the outgoings for the benefit of the blog.
Let's take a look Dave for example. Dave earns £2,000 per month AFTER tax.
As you can see, Dave spends almost £1,200 per month before he's even treated himself to a beer after a months work.
The main thing is, Dave knows what he's got left in his bank account for the rest of the month once his outgoings are tallied up and taken on the 1st of each month.
He also knows that he's got £800 left for the month.
Dave realises that he needs an emergency fund. That old boiler is bound to call it a day in the next few months and he's going to want a holiday, so he starts saving. £500 of his remaining budget goes in his savings. That will soon build up. £6,000 in a year!
As you can see, Dave is no mug. He's broken down his outgoings and worked out what he is left with for the month. He's then worked out what he wants to save each month and know's he's got £300 to play with after that.
Let's take a leaf out of Dave's book. It should be standard practice for anyone that wants to take control and manage their finances sensibly. Of course, circumstances will vary for everybody. Some of you may earn less than Dave. You may earn more and have a bigger mortgage payment. Some of you may not drive and therefore save money on fuel and car insurance. While there are variations in everyones circumstances, the principles remain the same.
You have to take away your outgoings for the month and assess what you are left with before determining what you are going to save and what you are going to spend on yourself for the month.
Take a look at the download below. This is the same spreadsheet that I use to track my expenses. Dave uses it too. All you have to do is download the spreadsheet and you can start to enter your financial information and the calculations are done for you. You don't even have the do the hard work!
Download for Windows
Download for Mac OS
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