Creating your budget
If you want to start the month the right way then this is the month that you need to start creating your budget, creating your budget is difficult if you are not used to working out the money that you have available to spend.
However, creating your budget is important, it allows you to access your financial health and understand your current financial situation.
The tools to create your budget
You will need to gather together information to create your budget, this will be financial information including any money that you have coming into your home, and the money that you need to pay recurring bills as well as fluctuating expenses.
It is important that you write down all sources of income, include any benefits or overtime that you have received this month.
Write down all expenses, these include the monthly bills that you pay regularly and at the same amount. Include the flexible bills, in this category is your groceries, fuel and entertainment. Don’t forget the less frequent bills, you must put money aside for these bills each month.
Add together all your expenses; you are looking that your income is more than what you owe, when you take off all your expenses. If this doesn’t happen then you will need to adjust your figures, chose the bills that are flexible for movement and adjust so you bring down your expenses down to lower or equal to the money you have coming into your home.
The process of creating your budget
You are going to need to give yourself enough time with which you will have to prepare your budget. Writing down all the information and setting it out on paper or a spreadsheet can make compiling a budget easier. You will have all the figures that you are going to need.
The aim of a budget is to get all your money to work for you; you must allocate a job for all of your income. The result, balancing your income and expenditure. This means you have allocated all of your income into different areas of your budget and you have not let money sit idle without a job.
A budget is freeing, it allows you to know you have all your expenses covered, with bills that you knew were due and have worked out how to pay.
Living within a budget is difficult for some people, they feel too restricted, however, if you manage your budget effectively then you won’t feel tied to debt and bills but free from the pressures of society to increase your debt burden.
It is important that as the month progresses that you constantly check you are within your budget. Making notes as you progress through the month on your budget as you realise improvements are possible means that when you come to make next month’s budget you will have more information to make an even better budget.