- Helps you to know what it going on - what money
you have and, more importantly, what money you haven't.
- Helps you take charge of your finances instead of
feeling that they control you.
- Helps communication. If you share your money with
someone else, it can help avoid the tensions that
can easily emerge as a result of personal differences
over handling money. It can help you and your partner
to prioritise where money should be spent.
- Helps you to see potential problems before it's
too late to do anything about them.
- Can save you time in the long run.
Having a budget need not mean you are destined to lead
a life of penny-pinching frugality. Nor should it entail
spending extra hours on paperwork - a few hours used
well at the beginning will mean that you only have to
spend a little time each month bringing it up to date.
For many working parents, childcare represents a major
hole in the family's monthly budget. With this in mind,
if at all possible, plan your budget before childcare
becomes a burning issue.
How do I do it?
Decide whether you're going to work to a weekly or
monthly budget. This will normally depend on whether
you are paid each week or month.
Assuming you opt for a month by month budget:
Monitor everything you spend for one particular month.
Buy yourself a small note pad and carry it with you
all the time. Pick an average month and write down a
list of everything that you spend money on. Decide to
do it for a day or two at first, then extend it to a
week, then two, and so on. It's a complete pain, but
we guarantee you'll be surprised!
You may find the temptation of a cappuccino and a Danish
pastry every morning all too hard to resist, but once
you see how much you're spending on it, you may find
yourself starting to think a bit differently. (Just
a Danish every other day, perhaps.)
Work out your monthly expenditure - using your 'average'
month's list as a guide:
- Write out your regular monthly expenditure (including
any debts that you need to pay off)
- Write out what you spend on other items (categorise
them - food, petrol or travel, clothes, treats, going
out, cigarettes, etc.)
- Make a 'guesstimate' of what you should allow for
unexpected expenditure - what if the car needs a new
tyre, etc.
Work out your monthly income - take your (significantly
shorter, we'll warrant) list and add it up
Work out your monthly balance. If you're spending more
than you're getting in, it's time to make a few changes.
Think about things that you really want or need and
those things that you could easily do without. Inevitably
there may be some soul-searching, but as the saying
goes 'look after the pennies and the pounds will look
after themselves' - you'll discover that cutting out
even small luxuries can make a big difference.
Continue to keep an eye on income and outgoings. Once
you know what you can afford to spend - and what income
you should be getting in - keep an eye on how it's going
month by month, to make sure that things aren't getting
out of hand.
Two more hints
1. Work hard to pay off your debts, but don't borrow
more money to pay off existing debts. If you think that
you may be in trouble with your debts, don't put off
the day when you admit it. Creditors are often more
flexible than you might imagine and, by acting early,
you could save yourself a lot of heartache later on.
Click the links button for professional and friendly
organisations who can help. Credit Action offer a freephone
advice line on 0800 591084, if you want to talk to someone
about the best way of dealing with your debt.
2. Pay off your debts before you start to save. The
interest rate on a debt will be much higher than the
interest rate on savings. You don't want to be chasing
an increasingly unreachable target, so be committed
to paying off as much as you can afford each month.
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