It’s all well and good saying that you’re going to set yourself a budget, but without truly knowing how to create one, it’s not nearly as simple as it sounds! Whilst the hardest part of creating a budget is sitting down and actually creating one, you don’t have to blankly stare into space for hours on end. Whilst short term loans are available if you find yourself in a financial emergency, in the long term you can feel more relaxed having a sensible budget and money to spare. Here, we’re taking a closer look at what you need to know when it comes to creating a budget.
Write Down Your Monthly Expenses
When it comes to budgeting, the first step towards better managing your money is to write down your monthly expenses such as telephone bills and rent. By writing down your monthly expenses, you’ll gain a far clearer image of what you’re actually spending your money on. Whilst writing down your expenses can be a time consuming process, in order to beat overspending and become more mindful of your habits, it’s a step that cannot be ignored.
Identify Your Spending Habits
Once you have written down your monthly expenses, it’s time to identify your spending habits. Having written down your expenses, you simply can’t ignore what you’re spending your hard-earned cash on, and although you might not want to admit it, we’re confident that this will help put the urgency of budgeting into better perspective. Chances are that you’ll be a little taken aback by what you’re carelessly spending your money on – and those Starbucks’? They add up quickly, don’t they?
Work Out What To Cut Back On
Understanding what you need to know for budgeting is a painful process at first. Once you’ve written down your monthly expenses and identified your bad spending habits, it’s time to work out what to cut back on. Many of us already have a clear idea of what we can cut back spending money on, whether it is investing in the latest trend or eating out one too many times a week. Whilst it can be difficult to comprehend, cancelling your Netflix subscription can do wonders – especially if you rarely have time to sit down, relax and watch the next episode of your favourite program!
Stop. Spending. Money.
By this, we don’t mean you have to stop spending money completely – just on the unnecessary luxuries you convince yourself to buy more often than you should or can afford to. If you don’t earn enough income to pay for everything you want it to, it’s paramount to work out what’s most important to you, and by stopping spending your money on things you don’t really need, you can work out what you miss, as well as what you’re doing just fine without. If you find yourself at a loose end, consider whether you really need it and if you can afford it. If not, check to see if it’s cheaper anywhere else!
The Bottom Line
For some of us budgeting is a part of our everyday lives, but for others, it’s an entirely new ballgame. By taking these top tips into consideration, you can be confident that you’re spending your money with good purpose and not carelessly throwing it away. From identifying your spending habits to working out what to cut back on, if we can do it, so can you!