Guest post by John Brisbane.
Why Aren't You Budgeting?
Right now, times are tough for us all and whilst some of us sit around waiting for things to get better, others are acting proactively to help themselves. One area many people are looking more closely at is their budget as this is a place you should easily be able to identify savings. If you are reading this thinking “I haven’t got a budget” then it’s about time you sorted one out.
Creating a budget isn’t hard (sticking to it might be though!) and shouldn’t even take that long, the rewards can be substantial however. Follow our simple steps creating an effective budget.
1) Calculate all your income (after any taxes).
2) Make a list of all your essential expenditure, such as mortgage, heating, water etc.
3) Add your daily spends together, everything from clothes to beer money. If you need to, it’s a good idea to create a spending diary to calculate this more accurately – you’ll be surprised at what it tells you.
4) Estimate an amount for occasional spending, such as house repairs and Christmas presents.
5) Total them up. As a general rule of thumb, its best to try and make a saving of 20% and this can be done by mortgage switching or cutting out the morning coffee, it doesn’t matter.
If you found that your spending far outweighs what you are earning, you might want to consider getting some professional advice from a debt expert (for more about debt, visit http://www.debtadvisersdirect.co.uk
It is also important to review your spending on a regular basis as it will change from time to time. It is a good idea to get into the habit of reviewing it on a weekly basis, even if its only for 5 minutes. By reviewing your spending on a regular basis you will be more informed to make better purchasing decisions when they need to be made.
Lastly, always remember to factor in some savings to your budget. Many people get bogged down with surviving the here and now, they forget to think about the future.
Budgeting is an elementary personal finance tool which simply should be used by everybody. It is the easiest and most effective way of creating a cross section of your finances and giving you an idea of what’s affordable and what’s off limits.