Budgeting And Sticking To It

Calculating the BudgetWhen you are starting to save or pay off debts, there will be the need to stick to a budget. It won’t be easy to fill in the figures as soon as you start, as you won’t have a perfect overview of everything you spend. The best way to get the details is to keep a spending diary for a couple of months and then go through that before setting out the budget.

It will show you where you are spending money and not realising it. 50p on a bar of chocolate a day is not that much but works out at £3.50 a week, £14 a month and over £150 a year. It is this sort of expenditure that needs to be budgeted for.

Setting Out The Budget

This will need to include everything that you will be paying each month. Hopefully after the bills, mortgage and food shopping has been set aside there will be money left and you need to decide what to do with it. If not you will have to make sacrifices. Items such as mobile phones and cable TV will be difficult to give up and sometimes contracts will not allow you to do this.

Expenditure on children will be hard to cut. You don’t want to stop them carrying out their hobbies unless things are really desperate. Holidays, birthdays and Christmas needs to be considered as well as things such as clothes, haircuts, car expenses and entertainment. As long as your budget covers all of these things, you can then decide what to do with what is left.

What To Do With The Leftovers

This will really depend on your circumstances. If you have included everything you need in the budget then this can either go into savings or be used for treats. It could be that this money will be used to keep cable or an expensive mobile phone if that is what is wanted, but if that is covered already, it can go for coffees and chocolate or a night in the pub. Cutting out all fun when on a budget will not work and you need to be realistic and add in something for enjoyment.

Making Non – Budgeted Expenditure

This situation is going to crop up and can be looked at from the needs not wants point of view. If you need it, then it has to be paid and this could be something such as a car repair, if it is a want such as a new carpet when there is nothing wrong with the old one then compromises may have to be made. You could trade off some things in the budget and find the money that way.

If it is one person who wants to make the purchase, then they could forfeit their share of the entertainment or clothing budget, or if it is as a couple, then the holiday fund could be used and alternative arrangements made. There will have to be a compromise unless extra money can be brought in.

Finally shopping around can be the answer. You may find what you want at a lower price, or a cheaper alternative, or you could find that shopping around with the grocery budget leaves enough left over for the unplanned purchase or expense.

Justin Kerr is the author of this intriguing article. He is works as a financial consultant at a prestigious multinational firm. He enjoys blogging about things that interest him in his spare time. He says for the latest news and updates on the binary options trading platform, click here.