In these troubled economic times the importance of keeping a firm grip on your household finances cannot be overstated. There are no longer any excuses. It does not matter how busy you are, you need to make sure you devote a small amount of time each week to be certain that you have a firm grasp on your income and outgoings. Failing to do so could end up causing you much misery
The good news is that becoming accustomed to preparing and then adhering to a regular household budget should not be a daunting task, nor need it take up too much of your valuable free timeWhat you need to do is to get a hold of all the salient information. Details of your income should be pretty straightforward – it usually comprises your salary and that of your partner if you live with someone, together with any interest or dividends to which you are entitled on savings and investments
Then you need to take a careful look at what you are paying out each month. Get your bills together and go through these carefully, separating the regular expenses such as you mortgage or rental payments, from one-off expenses
Once you have a good grasp of your income and expenses you should set one against the other and in so doing you will be able to highlight any times of the month when you may be looking at a deficit or where funds may be especially tight.And this is exactly the reason you establish a budget in the first place. If your budget highlights any areas when you could be faced with a short-term funding issue, you are able to approach your bank or building society in plenty of time to arrange a temporary facility to cover any such shortfall. The fact that you have gone to the trouble of preparing a budget in the first place to address any such potential problems ought to stand you in good stead with your bank as well
One other aspect of preparing a budget is that it can help instil a degree of self discipline which can help you to avoid those unnecessary impulse buys we all make, then tend to regret at the end of the month when we look at our bank statement. In short, if there is no provision in your budget for buying a particular item, you simply don’t buy it and as a result your personal finances should become rosier as each month passes, provided of course you have stuck to your budget in the first place
Working within a budget may at first glance appear a bit boring, perhaps a little dreary, so it is important to recognise when you are working on your plan that we all need a bit of fun now and then. That is why you need to include in your budget some allowance for a few treats every now and then. Be realistic – if you exclude any entertainment or leisure from your budget the chances are you are not going to stick to it, defeating the purpose. It’s better to accept that you will spend a certain amount each month on little luxuries or self-indulgent treats. This may mean it will take you a bit longer to reach your budgetary goals but it is better to take this approach than end up by being put off the whole process by trying to lead an unrealistically Spartan existence
Also, you need to recognise when doing a budget that unforeseen events inevitably arise which can set your carefully prepared calculations askew. It is therefore important that you include a monthly provision in your budget for contingent expenses, such as an unforeseen repair to your car or perhaps the need to call out the plumber to fix a leak. If you do not do this, there is the possibility that you will imagine yourself to be more comfortable than you actually are, leading you to overspend in other areas, and find yourself short when an inevitable accident or repair is required. Again, it is important to try to be realistic and objective when preparing you budget.
The last thing to say about preparing a budget is that it should not be something to stress about. The first time you try it, you may find it a bit of a challenge, but as you become more accustomed to the procedure it should become easier. And if all else fails, you could try some of the excellent budgeting software packages which are available for your computer.