Budgeting books can sound dull and boring, but budgeting it’s actually a way of giving yourself greater freedom without the anxiety of over-spending. A personal or household budget is essentially a spending plan, taking account of both income and expenditure in order to understand your financial situation and feel in control.
Many people think that budgeting means cutting down on luxuries or giving up on hobbies that cost money. In fact, budgeting is a way to live the kind of life that you want, within your means. By budgeting carefully, you can make sure you have enough money every month to keep up with your hobbies and still enjoy nights out or trips away at the weekend, but without the risk of ending up in debt or out of pocket.
Reasons to budget
Creating a budget lets you see where your money is going and to manage it. You can find out where you’re spending too much and may be able to put that money into something else instead, such as supporting your hobbies or going for a meal out. You can set financial goals and save for things you want in the future, like a new car, or just make your money last so you don’t have to go without at the end of the month.
Budgeting isn’t about beating yourself up or feeling guilty for spending too much money on inessential items. It’s about learning how to save money without ruining your quality of life. Be realistic: look at what you actually spend money on from week to week, or month to month, rather than what you think you should be spending money on. At this stage, don’t start making resolutions to be more frugal or thrifty, but look clearly and non-judgementally at where your money actually goes.
After totting up essential regular outgoings like rent/mortgage payments, bills and taxes, look at variable essential expenses like groceries and clothing. When you come to non-essential expenditure, include everything from alcohol and cigarettes to books, magazines and games, and the occasional flutter on bets.co.uk.
Try to pull together all your income and outgoings for at least the last three months. Add them up in different columns, then divide by the number of months covered to get a monthly average. You can use an Excel spreadsheet to keep track of this, or a budgeting app.
Once you know how much you have coming in and how much you regularly start, you can get on to the fun bit! This involves looking at where you can save money, moving it from areas where you spend too much to areas where you might be going short.
Staying in control
A good piece of advice is to create different ‘pots’ for different things, from future goals you’re saving for to regular activities and outgoings. Give yourself a monthly allowance to spend on nights out, for example, and stick within it. While this might sound restrictive, it also means you can go right up to your allowance limit without worrying or feeling bad. You can create similar allowances for gaming or sports.
Budgeting lets you stay in control. It allows you to enjoy your hobbies and treats without anxiety or the risk of going into debt. It’s easy to begin and, once you’ve got into the habit, you won’t look back.