Managing Your budget

Savings

Making a budget is the key to staying out of debt and on top of your finances. Often it is hard to juggle lots of different out goings and bills and sometimes you can find that there is still a lot of the month left and your money has already gone.

Making a budget can help prevent this and is really your financial survival tool that will help you stay organised and in a clean bill of financial health.

The concept of making a budget is a simple one. It basically involves you adding up your income and your outgoings and making sure that what is coming in is more than what is going out or at least staying in your bank manager's good books.

In addition to making your budget it is a good idea to make a note of everything your spend money on. You can do this by either keeping receipts for everything you buy and then evaluating your expenditures retrospectively or by writing everything down in a note book and noting your expenditures as you go along. This allows you keep track of all your daily expenditures and spot your weaknesses, whether its excessive expenditure on CD's, Clothes, Partying, or lavish food; if your overspending on something regularly and breaking your budget you will need to take action to limit this.

You should start by writing down all your outgoings; these include rent or mortgage payments, bills, transport, groceries, loan repayments, phone calls, and direct debits. Then make yourself a realistic limit for clothing, household items and socialising. Once you have down all your outgoings your can then take this away from your net income, if the sum ends up in the minuses then you will need to cut back on something in your budget until things work out.

Another tip is to add 10% on to your expected monthly outgoings. This will allow for any unexpected expenses. You never know what's going to pop up; your car might break down and needs repairs, vets bills, birthdays, and rent rises can all throw you from time to time so it's important to be prepared for this.

If you find you just cant get your budget to work for you and come into a positive figure, its time to start thinking seriously about where all your money is going and what can be avoided. Without living like a hermit it is possible to take a hit in the less necessary expenditures such as going out for meals so often, CDs, regular clothes shopping binges or excessive credit card use.

If you really are stuck in the red its time to take more serious steps quite quickly before you have creditors and landlords knocking on your door and county court judgements thrown your way. You could look at ways to increase your income, such as asking for a pay rise, working overtime or getting a second job. You may wish to sell some of your possessions to raise some funds, downgrade your car to a less expensive one or give up expensive subscriptions to top rate digital TV packages.

Other areas to cut down on can include cooking your own meals, often this can work out much cheaper than buying pre-made meals and take-aways, and its probably better for your health too.

Use less heating or electricity, try switching everything off at the mains instead of leaving things on standby, turn off unnecessary lighting, only have lights on in occupied rooms, turn the heating down (or off and wear a jumper), fix dripping taps and take showers instead of baths.

Other things can include only boiling as much water as needed in your kettle, and washing at lower temperatures, this can help save money and as an added bonus help the environment.

A good way to work out your budget apart from the old fashioned pen and paper and a calculator can be to use a spreadsheet program such as Excel. This can allow you to easily layout your budget and it will even do the sums for you. There are also specialist budget programs such as Microsoft Money, these have even more useful tools for your budget making exercise.

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