The beginners guide to managing your money: How to budget

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The beginners guide to managing your money: How to budget

The beginners guide to managing your money: How to budget

Budgeting – for some it might feel like a dirty word as they consider money to be something they work hard for and therefore can spend, but at the end of the month might find themselves out of pocket. If you’ve been looking for a new way to manage your money, start with budgeting. Here’s how…

Look at previous bank statements to see what you are spending your money on. Are there direct debits going out that you aren’t sure are still needed? Budgeting is all about making the most of your money so ensure you aren’t paying out for unnecessary things.

Next, consider if anything you are paying out for could be swapped for a cheaper alternative; downgrading gyms if you only go once a week or only getting your hair cut or coloured every quarter of the year can help bring your monthly costs down.

Consider where you will write up your budget. Is it a simple ‘jotting everything down in a notebook sort of job’ or will you pull out the big guns and load up Excel? Either works fine, it’s simply what you find easier to keep track of (Excel is probably the better idea, or you could look into a budget app on your phone, there’s a whole list of great ones at the end of the article).

Plan your month

It’s important when budgeting that you have a game plan, you need to know what is coming up so you can set money aside for it (and try to stick to the amounts you designate per activity).

Take a look at your bank account and work out how much you have left after the important bills and rent come out. This is what you will need to use for your budget for the month.
If you are paying back a loan, factor this into your main monthly outgoings. Take a look at this tool from PayPlan – answer a series of quick questions about your lifestyle and spending, and you’ll receive a verdict on how well you’re managing your money and whether you need to change your habits.

First, budget for all the necessary expenditures for the month. This means things like food and fuel or travel costs. Set an amount per week for these and take them out of your pot of money.

Next, move onto planned activities. Is there a birthday coming up that you need to buy a gift for? Are there drinks planned with friends in the middle of the month? Are you having dinner with your parents? Estimate how much you think these activities will cost (or if you really want to get serious you can look at menus and drink prices and work out exactly how much you’re going to spend) and factor this into your budget.

Depending on how social you are, this might eat up a considerable amount. You could consider trying some money saving techniques – such as just going for drinks instead of dinner or having people visit your house with food instead of eating out – to keep that budget amount looking flush.

Now you need to consider your personal budget. Will you or (if you have any) the kids need new shoes this month? Do you need shampoo and conditioner? All these sort of things can be estimated in a personal section of your budget and you should try to stick to the amounts of money you’ve set aside for them as much as possible.

If you have money left over after all of this, that’s amazing! You can either use this to top up your account next month or pop it in your savings.

Apps that can help:

Visual Budget – this app breaks down your budget visually, so you can see exactly where your money is going to go and can edit this as you go along.

Money Monitor – this app isn’t terribly pleasing on the eye but it does the job when it comes to breaking down your budget and setting amounts for each category.

Spending – this app helps you track your spending throughout the month so you can see where your money is going. It’s great to use alongside your budget.

 

 

 

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