I have asked the question before, Who budgets? and I am surprised that there are many people who don’t even know how to budget or where to start.
Budgeting doesn’t have to be difficult and take loads of time. It doesn’t have to be stressful, which I can understand would feel like that to many people. I mean, actually taking stock of your finances can be scary and daunting. It can also stress a lot of people out. I know it used to stress me out no end!
The simple fact is, once you have a simple budget in place, it makes everything else easier. You will feel less stressed, you can see where your money is going, you can start making those saving plans and a budget is really easy to tweak and amend when necessary.
But, for many, it’s the actual getting started. Where do I start? I have been asked before and it is simple. Start from the beginning.
Below are 5 simple tips to get started with budgeting to make it less daunting.
First thing you need to know is what money you have coming in and how much are you actually paying out. Start by writing down your sources of income and all your expenses.
Your income would include, wages/salary, any benefits you receive, any commissions or payments from side projects, selling things online. Any money that is coming to you.
Your expenses are simply everything that is going out and includes costs like rent or mortgage payments, utilities, groceries, and discretionary spending. Understanding where your money goes is the first step in creating an effective budget. Then with your expenses you would have the ones that don’t come out regularly, those variable expenses.
By also writing down your expenses, you can see where you may need to cut back.
Then you are going to Set Clear Financial Goals. Get clear on any short-term and long-term financial goals. Whether it's saving for a rainy day fund, paying off debt, or saving for a holiday for the family, having specific goals provides direction and motivation for your budgeting efforts.
You can even write these goals down and pin them to a board or your fridge. Get the kids involved too especially if it is saving for a holiday, you can ask them where they would want to go.
Categorise and Prioritise Expenses. Write down your expenses into fixed (unchanging) and variable (fluctuating) categories. Simply put these into 2 columns. As mentioned above, fixed are things like your mortgage/rent, car payments etc.
Prioritise essential expenses, you know the things that you need to make sure are paid. Remember though, you need to be aware and recognise areas where you can cut back if needed. Anything that isn’t essential, get rid. This helps create a balanced budget that aligns with your financial goals (remember the goals you set before).
Create a Realistic Budget. Create a budget that reflects your income, expenses, and financial goals. Don’t set anything that really is out of your reach at the moment, because you will lose motivation and not make any changes. Also, ensure that your budget is sustainable over time.
Be honest about your spending habits, and allow room for unexpected expenses. A realistic budget is more likely to be followed consistently and it can be tweaked easy enough
Use Budgeting Tools. Make use of budgeting tools and apps to really make this a simple process. Whether it's a spreadsheet, a dedicated budgeting app, or online tools, find a method that works best for you. I simply use good old fashioned pen and paper or my budget planner which can be downloaded and reused here:
Remember, budgeting is a process that may require adjustments over time. Regularly review your budget, track your progress, and make changes as needed to ensure it continues to align with what you are aiming to achieve financially.
I hope that these tips help you to get started with your budget and as always, reach out with any questions.
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www.themoneysavingmum.uk
