When we think of budgets, it all sounds very boring! We all think of budgeting as a long, drawn out process but it doesn’t have to be. Once you’ve worked it out, it will all be worth it!
To put it simply, it’s just a process of writing down all of your income and all of your outgoings. Easy peasey! Once you have a budget in place, you will feel a lot more relaxed about your finances as you’ll know exactly what is coming in and going out.
The first step is to write down everything you earn. Start with your payslip, write down the amount you earn after all your deductions, tax etc. Once you have found this, then write down any other income you receive, this could be from a second job, regular side hustles, any tax credits or benefits you may receive.
Add all of these figures up and that is your monthly income amount.
Once you know the exact figure of your monthly income, you need to work out what your outgoings are each month.
Working out your outgoings for the month, should be quite straight forward. Write down a list of all the bills you have to pay, make sure you remember everything, including the smaller payments. Then open up your online banking and make note of all the amounts that go out, e.g. mortgage, gas and electric, TV, phones etc and match them against your list of bills.
If you have bills that are paid quarterly or every six months, divide the payment amount by the number of months. Put that figure in to savings so you don’t need to suddenly find money for the bills when they arrive.
The best way to keep on top of all your outgoings, is to have all your payments come out on the same day. I have mine come out the day after payday so I can then forget about them for the rest of the month.
Once you have worked all out your outgoings, add up the total figure and subtract this from your income figure. This will leave you with the amount of money you have left over for the rest of the month. You can then divide this between savings, debt, groceries, entertainment etc.
After working out your budget, you are well on the way to financial freedom. Whether its becoming debt free, building up your savings or travelling the world, it all starts with a budget!
So, budgeting, that’s all there is to it. Let me know how you get on with yours.
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