Planning a budget can be a daunting task especially if you are trying to manage the financial health of you and you family. It is important to maintain control of your finances so that you are able to deal with any unexpected expenses as well as plan a family holiday, enjoy Christmas and birthdays and deal with “back to school” expenses. It can also ensure you are able to deal with an education expenses without having to compromise on saving for your retirement.
Creating a budget is not as difficult as it seems it merely requires some time and as much financial information to hand as possible. If you have at least 6 months worth of income and expenditure information to hand then you should easily be able to work out your financial situation.
You can create a quick template on Microsoft excel or choose from many free online budgeting spreadsheets to get you started.
To create your budget you need to get all the financial information you have for you and your partner.
Income
Look at your payslips and determine the average of 3 months pay each.
This can be done by simply adding your take home pay figure from 3 wage slips then dividing that total by 3. Do not include any bonuses here as this is not guaranteed and can differ dramatically depending on the time of the year.
If you know you constantly receive a certain amount of bonuses or extra income – do the averaging process but over a 6 – 8 month period to get a more accurate figure.
Don’t forget to think about other income you may receive outside your employment such as benefits or pensions.
Set Expenses
Look at 3 months of your household bills (e.g. mortgage or rent, utilities, council tax, insurance etc). Add all these expenses individually by type then divide by 3 to get your average rent payment and utilities payments etc.
Luxury / Miscellaneous Expenses
Find all your receipts and cash withdrawal slips. Look at what you have spent on groceries, clothing, meals out etc. Add these all up per month as a total, add our 3 month’s totals and then divide b 3 to find out what you typically spend a month on these luxury items.
Lastly you need to evaluate your expenses to see what you can cut back on. Your income – your expenses = what you have left over to save. Make sure that you are not wasting money on useless expenses and try and keep your savings figure as high as possible.
Do remember that a budget should not mean you have to deprive yourself – it is a means to helping you make smart financial decisions. Explain your budget to your family and set mini savings goals together with agreed treats when these goals are reached.
Author Bio
This is a guest post from the Fox a writer at Money-Fox.com a personal finance blog which aims to improve your finance.