Many households struggle with maintaining a budget from month to month. One major contributing factor to this is because monthly bills can change so dramatically each month that it becomes very difficult to predict outgoings. The other common factor is because a household has accumulated a significant amount of debt that is being repaid via installments. Usually the root cause is always the same however; many households simply don’t have a tight grip on their finances, despite this being one of the core foundations of a stable family home.
The silver lining that comes along with the pain of budgeting is that there won’t be too many nasty surprises, but in the unfortunate chance that against your best laid plans you encounter a sudden, unexpected bill, you’ll rest easier knowing that you have the financial literacy and competence to handle it (hopefully your budgeting prowess will allow you to start a small fund to deal with such emergencies) this minimises the chance of you having to rely on online loans, which come with their own set of risks even if they solve your immediate problem.
If you want to continue 2021 with a brighter financial outlook, then creating a budget for your household is one of the best and simplest things you can do. You can download digital budget templates online for free, like this one for example, which lists the columns for you so all you have to do is input your own personal figures and the template does the hard work.
On any regular budget template document you will have a column for incomings, this will be where you list your salary after tax. You will then be able to list all your outgoings. For this, you might want to have your bank statement next to you so you can go over all those regular monthly payments – including even the little ones. Make sure you remember your insurances, your utility bills, your food bills and rent payments too. Anything that regularly comes out needs to be listed on there. The template will also want you to list your debt as one of the key parts of the budgeting process will be figuring out how to pay that debt down more quickly. When you see it all listed out in this way, you get a better picture of your spending. Better Money Habits writes that this might also help you pinpoint excessive spending. For instance, it might seem like a cheap daily coffee, but when tallied up, you might realise that this coffee break costs you a lot each month. It allows you to adjust those habits and improve your financial situation. Small changes really can make a big difference!
A great tip from everydollar.com says that you should also remember a ‘miscellaneous’ category on your budget plan. We are human, after all, and will add things to the budget without thinking. For instance, if you need to pay some money to your child’s school, you might use your card and this will show up on your bill which you wouldn’t have included in your budget plan. Rank this stuff under ‘miscellaneous’ and give yourself a budget for that each month. This canal comes under that umbrella term.
You might also want to reward yourself after you have had a particularly good budgeting month. Set yourself a treat – like maybe money for takeaway – if you’ve done well. Have fun with your budget – it doesn’t have to be all doom and gloom! And give yourself grace, too. We all make mistakes from time to time with budgeting so if you have had a bad week with spending – don’t give up there. You can get back on track the following week. The problem is when you spend money and try not to think about the consequences. This allows you to temporarily “forget” the problem which won’t be helpful further down the line. You could end up in debt or in your overdraft which could have been easily avoided. In this way, a face-on attitude will be helpful. There is no point not being honest with yourself, if you know you have a spending habit, an impulsive shopping problem or you are simply forgetful, speak with other people in your family who may be able to help with keeping you on track.
You might also want to speak to a financial advisor who can give you other tactics for keeping your money working for you – maybe by even investing some.