How to prepare a budget

Many people need a formal, written budget in order to keep their expenditure within certain bounds.  Without going to the trouble to create a budget you could find you are spending more than you have to every week.  This will lead to disappointments when you are unable to find necessary funds to finance your future needs.

Without going to the trouble to create a budget you will eventually find yourself spending all your weekly income as your financial discipline weakens.  It is then that many people fall back on using a credit card and this will only worsen the situation as everything you buy on credit will one day have to be paid for.

As you get older you will wonder how others around you are achieving much more in life than yourself.  You may be heading towards old age with nothing put aside except your coming pay cheque.  It will all come down to the fact that the friends you are beginning to envy found out early in life the importance of creating a budget and sticking it.  Few people who have gone to the trouble of creating a budget ever find themselves in serious debt or bankruptcy.

If you haven’t begun creating a budget yet, now is the time to start, especially if you are facing one of the following life changing stages of your life:

• Planning a marriage.
• Expecting a child (or another).
• You’ve got a new job.
• You want to buy a new car, holiday, deposit for a house.
• You are getting close to retirement.

Creating a budget won’t be a difficult task if you do it realistically.  You must remember that you still have to live because if you become too stringent you will find you will start cheating on yourself and before long your budget will only be a memory.

It is easy to find out how much you earn – so start there – write it down. You will have certain fixed costs that you have to pay regularly such as; rent or mortgage payments, phone and internet costs, electricity, gas, car payments, food, entertainment etc.

Write down the cost of each. With a bit of luck at this stage you will have a bit left over.  Of this amount choose what you feel you can afford to put aside but leave enough for you to go out for a meal now and again, have a couple with the boys, girls night out now and again, even presents for family and friends.

If you have been realistic you should have a figure to put away that you can stick to.  This money will accumulate, especially if you place it in a special savings account so it will be there waiting for you when you want it to finance a decent holiday or go towards buying that new car you have always wanted.

The secret to sticking to your budget, now you have it up and started, is to review it regularly don’t be afraid to make changes when it becomes necessary and if you run across a windfall such as a bonus from work or an unexpected taxation refund, put some of that money away also to help build your fund.  Enjoy your life, don’t become too frugal, but don’t live life as a spendthrift either.

If you are married make sure you both agree on all your budget’s objectives.  It can’t work if only one party is willing to take part but it shouldn’t be too hard to convince each other of the benefits the family will receive when you know you have a cushion of money stacked away for when it is needed.

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