Hello and welcome back to my blog.
In this post I will be sharing my tips and tricks on how to start a budget the right way.
So if you are new to budgeting and would like to know where to start then keep reading.
Quick disclaimer, I am not a money saving or budget expert. This is just what I have learned over the last few years to save money.
Where do I start?
So you have had a look at your fiances and you are not happy with your savings or budget then the best place to start is by look at your outgoings.
If your outgoings are more then your income then you need to review all the bills that you pay. Is there a subscription that you could live without? Is there a way you can save money on the bills you pay?
When I started my budget, I got rid of 4 subscriptions that I hadn’t used for months, this saved me over £50. I also shopped around to find a cheaper car insurance which again was saving me over £50 a month.
There are some great comparassion sites out there:
These websites compare, car insurance, life insurance, house insurance and so much more. So if you have any of these make sure you shop around to save yourself some extra £’s!
Once you have got rid of any unnecessary bills or cut the cost of some of them, you should have less outgoings.
How do I decide how much money I need for my expenses?
So by now you have cut your bills you are ready to start thinking about your expenses.
Expenses is money that needs to be spent regularly, for example petrol, food, spending and transport. It can be very difficult to determine how much money you need so I would always recommend doing a trail run.
Some people like to budget per week, for me I budget roughly £20.00 a week for miscellaneous spending. I used to budget nearly £50 a week which meant I was just wasting money.
According to the website nimblefins.co.uk the average person in the UK spends £23.30 a week on food shopping (this does not include eating out) And a family of 4 spends on average £101.20 per week on food shopping.
So in a month a family of 4 will spend £438.50 on food shopping and a further £221.90 on eating out.
These figures do not mean that you have to spend this amount of money each week! Do a trail run and deterimne how much money you need.
I live at home with my parents so I only have to buy food for when I prepare meals for work, so my budget for food is only £50 a month. And this includes the occasional meal out.
My expenses are:
General spending (Dates, days outs etc): £100
Food: (meal prepping, meals out): £50
I have my expenses sorted. So what is next?
You now have worked out your expenses, you are now ready to start thinking about your financial goals.
Why have you decided to do this budget? Is it to pay of any debt you have? Save money? Whatever your goal is you need to keep this in mind when you get to this stage of your budget.
Having a goal allows you to be more motivated to stick to a budget, when you start a budget you will make mistakes but once you get used to it, it will change your finances.
I want to pay of some debt. How do I start this?
If you are paying off debt you can start your debt snowball. (check out Dave Ramsey’s blog for more info)
This is a Dave Ramsey method that I think is brilliant. To put it simply you list all your debt from smallest to largest, you then make the minimum payments on all your debt except the smallest. You then need to start paying off your smallest debt first.
For example if you have a loan to pay back that is £5,000 and a credit card debt that is £10,000 you pay off the loan debt as quickly as possible. Then once that is paid you off you can start paying of your credit card debt.
You may need to do some extra hours at work or even take up a side hustle to help you pay of your debts as quickly as possible. Check out my post all about paid online survey apps that you can do to earn some extra money.
I want to save money. How do I do this?
So you want to save money. But how much money would you like to save? Knowing how much money you would like to save will help you figure out how much you need to save each month.
For example saving £3,000 you need to save £250 per month. For me I am aiming to save £7,200 this year which means I need to save £600 per month to achieve this.
You also need to think about a deadline you want this money to be saved by. If you are saving for something in a few months you will need to put more money away a month.
Once you have worked out your savings goal and you deadline you can then start saving the money you need each month.
I think my budget is ready. How do I keep track of my budget?
So at this point we are ready to start using this budget!
- You have removed any bills that are not needed/ cut the cost of bills
- You have worked out what expenses and how much you need each week/ month
- You have started your debt snowball plan
- Or you have started your saving plan
You can keep track of your budget any way you would like. I personally use a spreadsheet as I love computers but most people use a budget planner, they are an investment but are so worth the money. It allows you to keep your budget all in one place.
There are so many websites that provide worksheets to hep you with your budget.
I hope that this post has helped you think about starting a budget and changing your financial situation.
If you have tried this budget method please let me know as I love hearing from you all.
Remember to follow me on Instagram where I share daily updates about my budget and savings journey.
Speak to you soon