If you find it hard to keep a solid grasp on your finances, or you frequently find yourself running out of money at the end of each month, then setting up a budget could be a great way to help you take back control.
Below are some of our top tips for crafting a budget that works for you:
Set your goal
It is important that you know exactly what you are budgeting for, so you can craft a budget that will realistically help you reach your goal as efficiently as possible. For example, if you are creating a budget to save for some work on your home that needs to be done as soon as possible, then you will need to make a stricter, short term budget in response. Alternatively if you want to budget so that you build up savings, giving you peace of mind should any unforeseen expenses pop up in the future, then your budget will be more long term, keeping track of your finances for years rather than weeks or months. Keeping your goal in mind means crafting a budget that will work for you.
Start tracking your spending
This is especially important if you are the type of person who often loses track of how much you’re spending on a day by day basis. Start with a set period of time – a month or a week, depending on which is more manageable for you – and keep track of every penny you spend during this period (Some people do this using pen and paper, though there are many apps and computer programs that are designed specifically for this use, if you’d prefer). This will help you gain a concrete view of all your expenditures, get on top of any unnecessary expenses and craft an effective, accurate monthly budget.
Create your budget
Once you have a detailed record of your spending habits, you need to weigh this against how much money you are bringing in, and create your budget accordingly. Separate your outgoings into fixed, variable and discretionary expenses. Fixed expenses are things like bills and rent or mortgage payments, the fixed things you need to pay every month. Variables include groceries and travel expenses, these amounts may fluctuate on a monthly basis. Discretionary expenses are anything else that you don’t need, such as eating out and entertainment, these may be the things you enjoy the most, but should be the things you look to cut back on if you want to save money.
Periodically re-asses your budget
Because there are many variables that can affect our lives at any time, no budget that you make is going to keep working for you indefinitely. This is why it is important to reassess your budget from time to time to make any amendments you need to. For example, if you get a pay rise you can alter your budget to reflect your new income. Alternatively, if you find that you’re not making steps towards your financial goal, you may need to rework your budget to reign your spending in more than you originally thought necessary.
If you are having more complicated financial issues leaving you spiritually burdened and adding stress to your life, then visit Trinity Financial Mission to get help taking back control.