A new financial year is upon us. The best way to own it is to plan now! Here are five of the best tips for making a personal or family budget, and sticking to it. Smart budgeting allows you to have enough for the things you enjoy, no matter what your age or income.
1. Work out your income and expenditure
The best place to start when you’re creating a budget for yourself or your family is to work out what comes in against what goes out each month. Write a list of your sources of income – your salary, any additional income from investments such as rental property, and interest on your bank accounts. Your income has to be factual rather than speculative, though – even if you’re due a pay rise or inheritance, don’t include them if they haven’t already happened.
Then work out your monthly expenses. Regular outgoings will include your mortgage or rent, insurance and household bills. Estimate your other expenditures, such as grocery and clothes shopping, as best you can.
Once you’ve done this, you’ll be able to have a realistic idea of where you need to make savings. You should aim to:
- Earn more than you spend
- Be able to afford occasional indulgences such as holidays, tickets to concerts or sport events, and dinner with friends
- Put some money away each month as savings and to cover the cost of emergencies
2. Make some necessary changes
This is often the most difficult part. You need to take a look at your expenditure and work out how much of it you actually need to spend. If you haven’t been to the gym for months, you should cancel your membership. If you spend a lot on clothes, could you save yourself money by shopping at factory outlets or online? Even the cost of buying your lunch each day could shock you into making sandwiches to take to work. Small savings add up into much larger amounts over time.
You can also make savings by spreading the cost of big events like Christmas over the whole year, keeping an eye out for presents whenever the sales are on. This will save you spending out drastically in December and running up a huge credit card bill in January to make up the shortfall.
Don’t aim to deny yourself all the things you enjoy; just be sensible about what you spend to avoid unnecessary waste.
3. Make sure you’re getting the best deals
If you want to stick to your budget, it’s important to continually shop around, instead of sticking with your current arrangements out of convenience or habit. Some of these changes are really easy to make – you can save a lot of money on your grocery bills, for example, by shopping at budget supermarkets like Aldi.
Visit price comparison sites to make sure you’re getting the best deals on your energy, insurance and other services such as mobile phone and broadband. Families can often save money by choosing a bundled package for their phone and internet services, as these often work out chea