If you find yourself overspending but don’t know what on or how to stop, then a budget might be for you. Enabling you to see how you’re spending your hard-earned cash, a budget can help those who already in debt, or help you to avoid falling into it. It’s time to take control of your finances.
What is a Budget?
A budget is extremely helpful if you are running short on money and can’t figure out how to cut down. Essentially, it is a record of how much you are spending, what you are spending the money on, and why. It enables you to keep track of your spending and allows you to see where you are overspending and what can be cut down to save you some cash. Budgeting can be done in any style you find most helpful; some people scribble down their budget information in a notebook, whereas others prefer to keep track in a neater more efficient way using a computer.
How to Prepare a Budget
It’s quite easy to feel lost when you begin a budget, as it’s not easy to tell which expenses should count towards the budget. To prepare, you should gather together information about your income, bills, taxes, living costs, travel expenses, leisure costs and anything else that you regularly spend money on. You should calculate your complete income including benefits and pensions to ensure that you don’t overspend above your income, as this could lead to debt.
Keep Track of Your Finances
Once your income and current spending information is gathered, you can calculate how much spare money (if any) you have, and it should become clear what you are overspending on. Now that the budget is set up, you should record everything that you buy by keeping the receipts or jotting it down. It might help to set a realistic spending limit every week by calculating how much money you can spend on expenses and dividing it equally.
How to Cut Down on Spending
Prepare for Emergencies
A good way to cut down on unexpected incidents that can really put a dent in your finances without warning, is to prepare for emergencies. Both home and health emergencies can never be expected, but they can be prepared for through insurance such as life insurance and appliance cover. The benefit to preparing for emergencies with insurance is an extremely notable one when you’re on a budget, as domestic emergencies such as a boiler breakdown can set you back anywhere between £150 to £400. You can find great emergency cover with companies like Certi for a small price every month (this company also provide a free boiler service), which can potentially save you hundreds of pounds – great for budgeting and saving money!
When buying groceries, there are multiple ways in which you can cut down the cost of your spending. If it is possible, buying in bulk can save you lots of money as multipacks sell the products for a lesser price than buying them individually. In addition, you will have enough of the product to last for quite a while without needing to spend on stocking up.
Keep an eye out when looking through newspapers, magazines and websites for coupons and discount codes, as these can easily reduce the amount you spend on food and are also available for many kinds of products, such as hair care. When applying a coupon, ensure that you read the terms and conditions, and know that some coupons can be used in conjunction with others, meaning that you can save even more money on your weekly shop.
Also, own brand products are often of the same quality as branded products, but are far cheaper, with some own brand groceries costing as little as 20p.
Save the Extra Money
Any money that is saved through your budget should be immediately and safely invested into a savings account. Not only does this allow you to see how well your budget is working by the amount that you have saved, but it also helps to remove the temptation of overspending as the money is no longer in your bank account. A savings account is a wonderful idea, not only for the already mentioned reasons, but depending on your bank, you could potentially earn interest on your savings and increase the amount of money that you have saved. They are very convenient as they are extremely easy to open, as well as being a safe place to store your hard-earned savings quickly, wherever and whenever you need.
Budgets are extremely useful tools which you can use when money is tight in order to get back on track with your finances. By keeping on top of your spending, it is easy to avoid debt, save yourself from debt, or gather enough money to finally go on that dream holiday of yours. Happy budgeting!