Fix your finances with a basic household budget by following this step by step guide. The recent economic crisis has affected people’s finances in a number of ways. With everyday expenses rising dramatically and wages stagnating, it’s easy to see why households are feeling the pinch.
This financial pressure has often proved too much and has consequently meant that many have lost control of their finances, missing important payments and turning to short term finance such as payday loans or credit cards as short term fixes.
Sometimes financial trouble is unavoidable; however in many cases it can be dodged by simply implementing a basic household budget, this is our guide to creating an effective budget:
Budget - Now it’s time to create your budget. Firstly, collate all the financial data you can such as your bank statements, wage slips, utility bills and any other data that may show sources of income and outgoings. Next you need to add up all of your income including your main wage along with any benefits or other sources of income you may receive. Do this for 3 months’ worth of income and then take an average.Now do the same for your monthly outgoings, total up your mortgage or rent payments, loans, insurance, council tax, utilities, internet, telephone and TV License. You may also want to include variable outgoings such as clothing costs, weekly groceries shop,fuel/ transport costs, entertainment and gifts. Take an average of your outgoings and then subtract this from your income figure, the number you are left with is your disposable income. If this figure is positive then that’s a great start, if its negative then you need to make some adjustments to your budget promptly.
Set Goals - Setting realistic goals not only gives you something to aim for but it offers motivation. If you have large amounts of credit and store card debt then a good goal would be to pay off this debt. Other popular goals are saving for your retirement, saving to buy a house to building an emergency fund. The financial goal that suits you best will depend on your financial status, it’s important that you remain realistic but be ambitious at the same time.