With the cost of living rising, many of us are more aware of our incomings and outgoings. As prices of essentials such as fuel continue to increase it can be difficult to manage a household budget. Experts such as The Budget Mom have demonstrated the demand for accessible, easy to understand financial and budgeting advice, but if you are still unsure where to start, these tips can help you get your finances in order.
Decide How to Record Your Finances
Recording your incomings and outgoings is vital if you want to have a true understanding of the money you have. You can record this information in a notebook or on your phone, but the easiest way to manage your money is with a spreadsheet on either a laptop or home office desktops as it can do the maths for you, reducing the possibility of errors.
Know Your Income
Firstly, sit down and calculate the amount of money coming into your account. You may want to do this on a weekly, fortnightly or monthly basis depending on how often you get paid. Include all money that goes into your account such as wages, benefits and child support. Record the dates you are expecting each payment to go in. Your total is your overall income for the period.
Know Your Fixed Expenses
There are some costs which are fixed – these might include rent, gym membership, car loans and other debts and direct debits such as payments for streaming services or your mobile phone. If you are unsure, look at a recent bank statement to monitor what you are paying for – you may even find some subscriptions you no longer use that you can cancel to save money. Calculate the total amount you pay on fixed expenses.
Do the Maths
Once you have these figures, you can start to figure out how much disposable income you have. Take your total fixed expenses from your overall income and the amount leftover is your disposable income.
Time to Budget
You will need to budget so you know how you are spending your disposable income. Make a list of everything that this money needs to cover – travel expenses, food and drink, entertainment, clothes and anything else you spend your money on. Be realistic with how much you need for each of these categories over the budgeting period. This won’t necessarily be the same each time – some months you might spend a lot on travel because you are going on vacation and others you might not be spending in a category at all.
What to Do If the Sums Don’t Add Up
If you have worked out your budget and you can’t afford to pay your fixed expenses (or don’t have enough disposable income to cover your current standard of living) there are a few options available to you. You might consider looking for a better paid job, taking on more hours or find a side hustle to bring in more money. You could make cutbacks in some areas, such as cancelling memberships you don’t use or switching them out for cheaper alternatives. If you have done this already and are still struggling, make an appointment with your bank to discuss your finances.
Budgeting is not exciting, but it is necessary. Having your finances in control is freeing and empowering, so make budgeting a priority.
