Budget is the most important thing you can do when it comes to managing your money. 35% of UK households do not have any savings, according to research from the Money Charity. With numbers like this, it is clear that saving, budgeting and managing money needs to become part of your personal lifestyle.
Allocate a set amount for savings
13% of UK households have savings that are under £1,500, according to the Money Charity. This shows that saving is a consistent problem for UK household, not helped by things outside of their control such as the credit crunch. You need to have savings that can provide a safety net for you and your dependents. You should have an emergency savings account, and a general savings account for things that you are trying to save for such as buying a house. Saving can be hard to do especially if you are someone who loves to spend money but saving forms the cornerstone of all budgets. How can you improve your saving patterns? Start today – it’s better to get started with saving as soon as possible because the more you save, the better choices you can make for yourself.
Pay your bills as soon as you get paid
Some bills can be paid in the middle of the month but this can lull you into a false sense of security. If you want to create a solid budget for yourself, allocate cash for bills that you pay ahead of the day that your bill is due. This is possible if you don’t have a direct debit. If you have direct debit, then you need to wait for the day that your payment will go through.
Use online money management software
The rise of technology means there are no more viable excuses when it comes to noting down what you have spent on your personal finances. You can use smartphones, online spreadsheets and money management software to record how you are spending your money. You should use software if you are busy and you don’t like writing things down. Be in the driver’s seat of your personal finances by using software that manages your expenses online.
Manage your loans and credit
More people in the UK are taking out loans and overdrafts, according to the Money Charity. The growth of personal loans, payday loans and overdrafts means that credit is becoming more important in a personal finance budget. Your budget should have sections that includes a list of all of the loans that you have, the minimum repayments expected monthly and the due date of all of the loans that you have.
Including your loans in your budget helps you to have a stronger picture of the money that you need to live and to maintain your lifestyle. This might also inspire you to take loans that have affordable interest rates or to repay your loans quickly.
Eating Out, shopping and entertainment
This is going to be one of the most popular sections of any budget. Whatever your favourite part is whether it is shopping, restaurants or going out with friends, we all know that this costs money. These sections should not be more important than saving or paying your bills. You should only add money to these sections after you have paid for your bare essentials.
Always have rent money ready
One of the oldest lessons of money management is always have money to keep a roof over your head because all the other money problems you are going through can be solved. You must ensure that you can pay rent. As soon as you get paid, pay your rent on time to your landlord to ensure that you have shelter. Having shelter is a basic human right, but sometimes financial problems can create homelessness. Ensure that your rental payments or mortgage payments are given high priority for your budget because you will always need to have somewhere to live.
Know how you are going to transport yourself to work
Depending on where you work, you need to figure out if you will be paying for public transport or if you are going to be paying for fuel and other things for your car. You should not spend all of your money and then fail to have cash to take yourself to work, for example. Public transport can help you to save money because you will not be pouring your cash down the fuel pump. However, season tickets for the train can be extremely tough to pay up front so it is something that you need to figure out for your budget. If you like driving and you like the ease of driving to work, a car is for you. For people who live far away, driving is also ideal because it helps them to get to work on time.
Spend less than you earn
Your budget will reveal to you what your financial profile. You need to teach yourself to spend less than you earn, if you are someone who overspends every day. One trick you can do that works is you need to figure out what your daily allowance should be. You are essentially giving yourself an allowance of what you can spend on anything and everything on a daily basis. As long as you stay below your daily allowance, you will be able to manage your budget effectively.
Factor in the cost of your children
Your children or child dependents are going to be important additions to your budget. Children need many things such as clothing, shoes, food and gifts that can definitely impact your budget. If you have children, you should ensure that you always keep money to the side to keep your children safe, happy and healthy with a budget that supports their need to grow.
Start today to create a budget that will help you achieve your goals and dreams. Budgets are not meant to be restrictive but they are meant to help you use money in the correct ways without overspending or falling into debt. How are you going to create a budget that works for you?