As you may have gathered, we live pretty frugally (with minor slip ups). In an effort to demonstrate how committed we are to the cause, and perhaps help anyone else who is struggling to make a decent budget planner, I thought I'd share our budget planning tips. I'll do a couple more posts on money and money saving this week, as I've got a stack of things that I keep meaning to post on in this area.
The first step, in this household, is to put me in charge of the money. My background is finance and I'm a control freak; two qualities that make me perfectly suited to running the household budget. But whoever it is, make sure that someone (or both/all of you, if you're a couple/family with adult children/menage a trois and prefer that) is prepared to sit down for one day and do it, and then spend an hour or so on it once a month.
After many years of trying and testing budgeting, here's my foolproof method to sorting out your budget:
1) Download the Money Saving Expert budget planner. It's the best one I've found by a long shot. The MSE website is generally pretty darned amazing, so if you're looking for information on money saving in any form, check out the articles and forum on there.
2) Do the fun bit, put your income in the 'what do you earn?' section. If your income varies, use either your average or lowest monthly income (always always always budget for the worst case scenario - it's a lot easier to spend extra money than make extra cutbacks at short notice). I include child benefit and tax credits in the income section, but if you put any benefits straight into a savings account or spend them on something specific, remember to account for that in the spending section
3) Go through the 'what do you spend?' section and fill in every single thing you spend on. Don't estimate unless you absolutely have to (and if you do, make sure that if anything you're over rather than under estimating). Use utility bills and/or online banking to work out how much you spend on your bills (look at previous statements to average things like electricity over the year). I can't emphasise enough how important it is to spend time on the spending section. It's so easy to skip over boring bits or say, "oh, I can't possibly spend more than £25 a month on electricity (we do, and we're pretty bloody careful). There are sections for food at work and drinks out. If you eat at work or go out, use them.
4) Did I mention that doing the 'what do you spend?' section is really important? I need to add something - it's really important to do this budget for what you actually spend, right now. Not what you need to spend in order to be able to save £500 a month towards a house deposit, but what you actually spend at the moment.
5) A note on debt spends. If you have fixed loans, put in the actual loan amount. If you have credit cards, put in the minimum amount for now (unless you know you're happily meeting a sensible sized payment every month). We can fiddle with these figures later if there's money left over.
5) Double check your spends. Have you really put everything in? Go through at least one month's bank statement and make sure every single thing you spent on has an allocation in the budget. Don't say, "oh, that was a one off," make a bigger allowance in your big one offs section - 12x what you spent in one month, to be precise. Remember, budget for the worst case scenario, and you can never be disappointed.
6) Look at the 'Check your results' section and (a) jump up and down with glee or (b) panic. In my experience, the majority of people who do this properly and aren't earning really quite a good salary have to go for option (b) at this stage. So don't worry if you do. If you're one of the lucky option (a) types, thank your lucky stars and don't waste the excess on frip (our family's universal term for all things unnecessary) - if you put only a minimum payment on your credit card in the spending section, I would say it is essential to put absolutely every penny of this spare cash into paying off the card/s as soon as possible, especially if it's not 0%
7) If you were a (b), try not to panic too much. I'll be back tomorrow with lots of tips on cutting down the excess and making the world a happy place again.
Two other that started the day with their own blog posts, but have been amalgamated due to not being remotely important in the grand scheme of things:
1) Typical, on the first day of our non-meat challenge, I find a brilliant looking low salt bacon cure. Am I the only one who didn't think of streaky bacon coming from the belly and back bacon coming from the loin?
2) Ha, I've just clicked on one of my own GoogleAds! I suppose I probably won't get paid for that. But look, it is a useful website - I don't know if the jars are any good (I may never need to get new jars again after my bulk Le Parfait purchase from Ebay on the weekend), but it's got some really cool labels, which I badly need (I mean, I need labels, not I need cool labels, but I'm not complaining).
The first step, in this household, is to put me in charge of the money. My background is finance and I'm a control freak; two qualities that make me perfectly suited to running the household budget. But whoever it is, make sure that someone (or both/all of you, if you're a couple/family with adult children/menage a trois and prefer that) is prepared to sit down for one day and do it, and then spend an hour or so on it once a month.
After many years of trying and testing budgeting, here's my foolproof method to sorting out your budget:
1) Download the Money Saving Expert budget planner. It's the best one I've found by a long shot. The MSE website is generally pretty darned amazing, so if you're looking for information on money saving in any form, check out the articles and forum on there.
2) Do the fun bit, put your income in the 'what do you earn?' section. If your income varies, use either your average or lowest monthly income (always always always budget for the worst case scenario - it's a lot easier to spend extra money than make extra cutbacks at short notice). I include child benefit and tax credits in the income section, but if you put any benefits straight into a savings account or spend them on something specific, remember to account for that in the spending section
3) Go through the 'what do you spend?' section and fill in every single thing you spend on. Don't estimate unless you absolutely have to (and if you do, make sure that if anything you're over rather than under estimating). Use utility bills and/or online banking to work out how much you spend on your bills (look at previous statements to average things like electricity over the year). I can't emphasise enough how important it is to spend time on the spending section. It's so easy to skip over boring bits or say, "oh, I can't possibly spend more than £25 a month on electricity (we do, and we're pretty bloody careful). There are sections for food at work and drinks out. If you eat at work or go out, use them.
4) Did I mention that doing the 'what do you spend?' section is really important? I need to add something - it's really important to do this budget for what you actually spend, right now. Not what you need to spend in order to be able to save £500 a month towards a house deposit, but what you actually spend at the moment.
5) A note on debt spends. If you have fixed loans, put in the actual loan amount. If you have credit cards, put in the minimum amount for now (unless you know you're happily meeting a sensible sized payment every month). We can fiddle with these figures later if there's money left over.
5) Double check your spends. Have you really put everything in? Go through at least one month's bank statement and make sure every single thing you spent on has an allocation in the budget. Don't say, "oh, that was a one off," make a bigger allowance in your big one offs section - 12x what you spent in one month, to be precise. Remember, budget for the worst case scenario, and you can never be disappointed.
6) Look at the 'Check your results' section and (a) jump up and down with glee or (b) panic. In my experience, the majority of people who do this properly and aren't earning really quite a good salary have to go for option (b) at this stage. So don't worry if you do. If you're one of the lucky option (a) types, thank your lucky stars and don't waste the excess on frip (our family's universal term for all things unnecessary) - if you put only a minimum payment on your credit card in the spending section, I would say it is essential to put absolutely every penny of this spare cash into paying off the card/s as soon as possible, especially if it's not 0%
7) If you were a (b), try not to panic too much. I'll be back tomorrow with lots of tips on cutting down the excess and making the world a happy place again.
Two other that started the day with their own blog posts, but have been amalgamated due to not being remotely important in the grand scheme of things:
1) Typical, on the first day of our non-meat challenge, I find a brilliant looking low salt bacon cure. Am I the only one who didn't think of streaky bacon coming from the belly and back bacon coming from the loin?
2) Ha, I've just clicked on one of my own GoogleAds! I suppose I probably won't get paid for that. But look, it is a useful website - I don't know if the jars are any good (I may never need to get new jars again after my bulk Le Parfait purchase from Ebay on the weekend), but it's got some really cool labels, which I badly need (I mean, I need labels, not I need cool labels, but I'm not complaining).
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