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It doesn’t really matter what your circumstances. This budgets for dummies post is about creating a straightforward household budget in 4 easy steps that helps you. Maybe you’re a family and your budget is starting to run away from you. Maybe this is the first time you have had to set a budget. No matter what your life circumstances are right now, with my help creating a household budget will be straightforward.
You don’t need to be scared of creating a budget. Just take each step at a time. In fact I recommend you don’t do all the steps in one sitting as it can be daunting. Take an hour each day and follow the step-by-step guide to generating a budget that is right for you.
Step 1: Gather everything together
This can be time consuming so stick with it. Pull all your paperwork together which includes your pay slips, your credit card statements, bank statements, bills and anything else you have. Get them all together in one place. That’s the first task completed. Well done to you!
Step 2: What money do you have coming in?
On a piece of paper or better still in a notebook, list all the income that you have coming in to the house. This could include salaries, social security benefit, child benefit, savings interest.
If you don’t have a regular income try and guess what you might expect in a normal month. I would suggest you guess on the low side as over-estimating may lead to an unrealistic budget!
Step 3: What money do you have going out?
Be aware that this part of the process may take a little time but don’t worry I’m here for you every step of the way!
Using your bank statements, bills, credit card statements list ALL of your expenditure in a typical month. As an example your fixed monthly expenses would normally be your mortgage/rent, insurance, utility bills, credit card payments, groceries, gas/petrol, clothing, entertainment.
Step 4: Compare the difference
Now that you have your income and your expenditure you need to compare the figures. What is the difference. You need to ask yourself do you have any expenditures that you haven’t accounted for? What about those times you nip in to the coffee shop? Are you wasting money on lunch or buying items you don’t need?
If you are in balance but want to reduce your costs to save for a holiday or other item, or indeed if you are out of balance (i.e. you’re spending more than you are making) there are two options here. The first is spend less money each month. The second is increase your income by making more money.
Whatever your situation it’s always best to balance your budget by trying to reduce your outgoings in the first instance. Have a read of this post on 10 Ways to Slash Your Spending Now for some hints and tips on how to reduce your outgoings immediately.
Step 5: Sticking to your Plan
Once you have established your income and expenditure and looked at where you can reduce your costs the next step is sticking to your budget. This can be the hard part. Of course there are times when unexpected items crop up that will often not be in our budgets. That’s ok though. If you spend in one place then you need to reduce it in another or make more money to cover that expenditure. If you don’t do this then your budget will suffer. I call this leakages!
Think of it as a boot with holes, eventually the boat will sink. So it’s best to plug those leaks as quickly as possible. If you are serious about money management then you will find a way to stick to your budget.
How to Cut Back & How to Make More Money
When working through setting up a budget you may notice that your outgoings are increasing. That is common, however it’s possible to get them down with some easy steps as well as increasing the money you have coming in to your home.
By doing these two actions together will allow you to take charge of your finances and put you in control again. There’s nothing as empowering that making changes that improve your life and finances.
Ways to Cut Back
Check Your Utilities Bills – are you on the best plan? Phone them up and ask, ask for a discount. Don’t take no for an answer.
Cut the Cable – If you don’t watch it, then get rid of it. Would you be better with a cheaper alternative like Netflix? Do so digging to see what the best options are for you and your family.
Save Money Using Grocery Saving Apps – use the likes of Shopmium which gives you discounts or sometimes free groceries. Head over to this post on 4 amazing apps to help you save money on groceries. Download the apps and see how much you could save yourself.
Ways to Make More Money
Blogging – Blogging is a great way to start making money. You can make money in a few ways blogging. First you can get an income through affiliate marketing. Secondly you could make money from sponsored posts. Want to know how to set up a blog? Then why not sign up to this free 7-day email course on how to set up a blog? This is a great free course to start you off.
Survey Sites – You can get paid cash for surveys but there are some survey sites better than others. I highly recommend two survey sites.
Prolific Academic is a survey site but with a difference, it is mainly used by researchers from universities so the surveys you complete are that little bit more interesting – in my opinion anyway! You are paid in cash so get registering today and find out how much you
can make during your lunch break! Surveys last from 2 minutes to 20 minutes. You can earn up to £20 per hour with Prolific so a great site to start earning cash.
Another survey site is Pinecone. This is a great site, where you get to help influence tomorrow’s products! You complete surveys from the comfort and convenience and get paid for sharing your thoughts. Membership is free and only takes a few minutes to sign up. Pinecone is very generous in terms of payment – you can earn up to £3 per survey so worth signing up to now! Why not register here and start earning now?
I hope these steps help you to set a realistic budget – a budget for dummies isn’t really an appropriate name but you get the idea. They are for people that need a little help. If you have any questions at all about this just reach out and email me hello (at) purelyfinances.com and I will do my best to answer any questions you may have.
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