Create A Budget That Works for You
By Mr Bankruptcy
1st February 2023
Having a budget always makes good financial sense, but when times are financially challenging a budget can have an added impact in helping you to identify, acknowledge and start tackling your financial problems.
Now, more than ever, people are looking for ways to make the money they have go further, so here is my way to creating a budget that can work for you and your needs.
What do you need to know?
Creating a budget for yourself is about knowing what you can realistically afford to spend, putting you in a better position to handle financial surprises. To create a budget that’s going to work for you, there is some information you need to get you started:
- Your net income so that you know how much money is coming in each month.
- How much you are spending every month. This can be broken down into fixed expenses (such as mortgages and rent, utility bills, subscriptions, phone costs, etc) and more variable expenses (e.g. fuel, entertainment, food shopping), which are necessary, but you have more control over them. You can find all this on bank and credit card statements and receipts to make sure you aren’t missing or underestimating any outgoings.
Using your financial information to plan your future
A budget is a financial plan, which needs an ultimate goal, intermediate steps to get there, and an accurate analysis of your start point. Once you have a clear picture of income and outgoings, you can use this data to take control of your own finances:
- Break down expenses. Split costs into fixed and variable helps you to understand exactly where your money is going, what your bottom-line cost of living is and where there might be opportunities for savings.
- Set realistic goals. Do you want to clear debt, save for a holiday, create an emergency fund? Defining short and long term goals gives you something to aim for and helps you understand what you want to achieve with your finances, making it easier to stay focused on your financial targets.
- Create a plan. Writing down a budget turns good intentions into solid action. Define how you’re going to achieve your goals, weekly or monthly spending limits, allocate income for the basics, the good things, paying down debts and to build an emergency fund if possible. A budget also gives you a yardstick against which to measure progress and adjust your plan to stay on target.
- Review. A budget must be a living document to be effective. Revisit and amend you plan on a regular basis to reflect changes in your circumstances or the financial climate, such as an increase in salary or a hike in mortgage repayments.
Creating a budget that works for you is based on having an honest, realistic understanding of your current financial situation and where you want to go. It can then provide you with the route to developing good financial habits, whether you want to avoid debt or to deal with an existing debt problem.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive, friendly and non-judgemental approach, we offer a wide range of advice and professional services to individuals and business owners/directors who face unmanageable debt or are immersed in a civil or commercial dispute. Our service includes:
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