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Today I want to share with you how to prepare a budget. This is quite an important part of our family life as while I don’t budget every single penny of our spending this helps us hugely.
For me, a pound saved is the same as a pound earned. Really, as a UK taxpayer, I need to earn more than £1 to actually have a pound! This is why I plan for family finances, track our spending and do what I can to save money.
Knowing how to prepare a budget is only part of the battle really. While I’m going to talk you through the basic steps you need to think about why it is you want to budget.
Do you want to have more available money? Are you looking to save money? Do you want enough money in your family finances to have another baby? There should be motivation there, even if it is just to have more money. Who doesn’t want more money right?!
Record all of your income
The first thing you want to do is record down all of your income. Look at your take-home pay, after any tax, pension or other deductions. Don’t forget to include any income from dividends, savings or other sources.
Track your spending and record all outgoings
Look through a full year of your bank account if you can to track your spending. Categorise ALL of your spends into sections such as regular monthly payments, essentials like gas & electricity and your rent or mortgage.
Make sure you’re aware of all direct debits and standing orders. Look at areas where you regularly spend money on things such as haircuts, takeaways, family days out etc. By calculating a full year of spending you can get a realistic overview of the money that your family requires. Assuming that you don’t want to change your lifestyle much.
Make sure you check your credit card statement and places like Paypal too.
Start your budget
The basic gist is once you know your income and your outgoings you can work on your budget. You can set aside monthly amounts for pots such as Halloween, Christmas, Children’s Birthdays and more.
By writing down your budgeted amounts you will be able to make savings on a monthly or weekly basis to fill up your pots. Once you have budgeted for all areas of your life then you know how much money you have left for additional saving, debt repayments or just spending on dream purchases.
Think about special occasions and annual occurrences
When you’re looking at your outgoings be sure you budget for annual events, such as an MOT or service on your car, and any Birthdays or special occasions.
If you like to buy Halloween decorations or new Christmas tree ornaments, then build this into your budget. Stop being surprised when Christmas comes around by saving a small amount throughout the year.
If you save from January to November for Christmas then you’ll have the money available in early December to start your shopping and stock up on food and other goodies.
Change your habits
Looking at a whole year of spending can make you feel a little queasy! Perhaps you’re spending a mortgage payment annually on takeaways. Maybe you’ve realised that your love of fast fashion is costing you a small fortune.
Now that you’re aware of your spending you can begin to change your habits. Look at ways to save money on takeaways or discover the joys of the charity shop. Can you use shopping apps to save on groceries or maybe you can save money on fruit & vegetables.
Make savings automatic
If you want to start building up your savings then you can save a set amount per month or week to help you hit your annual savings goals.
You can consider looking at an automatic savings app, although recently I’ve fallen out of love with them after a few glitches and delays receiving my savings back.
Why not start a savings challenge?
Earn extra money to boost your finances
Why not consider some ways to make a bit of extra cash? You can look at matched betting, which is something I’ve been using for a few years now to make a nice amount of cash monthly. If that isn’t your bag then what about completing paid surveys? I’ve got a whole host of ways to make and save money.
Now you know how to prepare a budget why not check out some of my other money saving and money making posts?
Are you preparing financially for Christmas?
There is never a better time to start saving for Christmas than right now! These last minute ways to pay for Christmas are great to earn some extra cash before Christmas. Alternatively, check out my favourite ways to make and save money to kickstart your Christmas finances.
Fancy a new budget planner or diary to start your budgeting off right?
I hope you’ve found this post on how to prepare a budget useful! I’ve got lots of great content planned for this year and can’t wait to share it all with you.g