Whether you are currently in debt or not, having a clear and accurate picture of your monthly finances is important. It means that at a glance you can
- See how much money you have spare each month – or not as the case may be
- Plan for any known future spend
- know at a glance your current situation if a financial emergency should occur
Whilst the majority of people know how much is going into their bank accounts each money, a surprisingly high number can’t answer immediately how much goes out - and when. Some may know the amounts of their monthly bills and others don’t even know that much, they just work on a wing and a prayer and hope there is money in the account when they visit the ATM or go to the cashier at the store.
Whatever your situation, setting up a budget planner is important and it’s easy to do.
Setting your budget planner up
Preparation is key when looking to put it all down on either paper or on the computer, so the first step is to find out all the relevant information. This is also a time to be thorough – and honest. There’s no point in putting together a budget planner if you decide you want to conveniently ‘forget’ about certain payments such as how much you spend on your credit cards or the subscriptions you have for magazines you never read but keep forgetting to cancel.
Take some time – don’t be surprised if it’s a few days – to gather everything you need. This includes salary slips, bank statements for the last few months (3 will give you a good average of outgoings), copies of your current utility bills and then documents which show any other personal finance commitments such as loans and credit card payments. You’ll also need to find every receipt you can to give yourself an idea of how much you are spending on food and other living expenses.
What to do with all the information
Once you have everything to hand, it’s time to start committing the figures to paper or to a document on your computer. It doesn’t have to be complicated and you don’t need to be a spreadsheet genius. If you’re really stuck, there are some fantastic budget calculators online to take the brain strain away from you.
Start by listing your income. This should include salary, benefits, pension, any child maintenance and any other kind of regular money which comes into the household each month. Add this up and you have your income total.
Now do the same with all your monthly outgoings. List each utility and items such as the mortgage or rent along with insurances, personal finance payments and any other regular outgoings such as subscriptions or activities such as dance class or soccer if you have children. This is the point where it’s really important to be honest – however much you may feel the total may be painful to see, there’s no point in starting something fresh knowing it’s not a true reflection. Add these up and deduct from your income.
If your total is a positive one, this is excellent news and gives you the opportunity to look to start to find effective ways to save your extra money each month to get the best interest rates available. If the result isn’t so great and you have more going out than coming in, it’s time to start tackling the situation. Whichever side of the coin you land on, there’s always ways to cut excess spend to improve your financial situation, so this is something to now start thinking about.
If you find that you are running short each month but only by a small amount, have a look at payday loans online here where you can look to borrow enough to bring your balance sheet back into the black from the red. Use this bridging solution in conjunction with making savings where you can and once the loan is paid back on payday you’ll know that you can start the following month with a clean sheet and build from there.