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Tips for Creating a Budget and
Sticking to It!
There are lots of ways to create a good budget. One of the best ways is to
work out everything you earn and everything you have to pay for each month.
Then you can create a budget on the things that you have to pay for with the
amount of money you’re earning.
Creating the budget doesn’t have to take long and can follow a few simple
steps:
1. Work out all your ‘committed costs’. These are things that you must
pay for in order to live, like your mortgage, loan repayments, utility bills
such as electricity and most other monthly bills that are fixed every month.
2. Next work out all your ‘essential costs’, such as food bills, how
much you spend getting to work etc. Once you have worked this out, what you
are left with is your disposable income. This is the income you have left to
pay for things that you could do without like clothes, leisure time or a
coffee at Starbucks.
3. Then list all the monthly ‘consumable costs’ you want to pay for on
a monthly basis like a shopping trip to buy birthday gifts, or a hobby. This
can change month by month depending on what you have to pay for or you can
budget every month a certain amount to pay for things such as clothes and
shoes or a holiday at the end of the year.
When you create the list of the consumable costs, the budget becomes almost
useless if you are regularly buying things you haven’t budgeted for such as
regular trips out to restaurants or the movies. All these things should be
budgeted for and you will know when you have accounted for everything because
you will be able to predict you bank balance very easily.
Another few tips to remember when creating a budget:
1. Don’t plan to spend all your money every month because this will
mean you won’t be prepared for unexpected costs, such as paying a plumber to
fix a burst water pipe.
2. Try to save every month to account for a sudden change in your
circumstances and also to prepare as early as possible for you retirement. The
earlier you start, the more you can save.
3. Be disciplined and stick to your budget. A budget will only work if
you are willing to stick to it. If you stray from your budget then your money
will start disappearing from your bank account.
4. Finally, keep track of your monthly costs and every now and again
look to see where you can save money by cutting out things you no longer need
or want. It can be surprising what we pay for when you actually look at it.
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