How To Create A Budget And Stick To It!

Budgeting is tough, not only because of the rise in the cost of living but because it is difficult to pare back your spending to just the essentials. It is human nature to want a few treats now and then, whether that is a meal out, some new clothes or a break from the nine to five.

For too long people enjoyed access to easy credit, but times have changed and lenders are no longer so relaxed about how much and to whom they lend. Now consumers are forced to address the fallout from the boom years, cut back on spending and live within their means. This is made even tougher with rising food and energy prices, so the best way to bring your spending under control is to manage your expenditure carefully. Here’s how to create a budget and stick to it.

Start With Your Income and Expenditure

You cannot possibly create a workable budget until you have addressed your current incomings and outgoings. Record income from all sources, including your wages, savings interest, dividends and any benefits you receive. As painful as it may be, you must be honest with yourself and record every detail of your income and expenditure, even things such as haircuts and money used for transport. Don’t forget that expensive cappuccino you treat yourself to   it all adds up! It is also a good idea to break your spending into categories, as this helps you to see immediately if there is excessive spending in one particular area.


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Start with fixed payments and the most important bills which must be met, such as your mortgage or rent, loan repayments, credit card repayments, energy and food bills. These are the essentials for most people and all the sundries that come after can be more easily cut back or eliminated altogether. Don’t forget to account for annual or quarterly payments that you may forget about (TV licence, car insurance, house insurance, phone bills, etc.). The best way to record a full picture of your income and expenditure is to use bank and credit card statements and receipts from purchases.

If you are self-employed or you own your own business, you may already have an accountant; for example, many contractors are small business owners and using accountants for contractors is a great way of keeping control of all your income and expenditure information. Spreadsheets are a great idea, as a box full of receipts can easily become overwhelming and you may miss something important.

Make Cuts and Start Saving

The figures never lie. If you are spending beyond your means identify areas where you can make cuts or use a cheaper provider; for example, change where you shop for groceries or switch energy suppliers. It may be tough but you might also have to cut out some luxuries and stop buying on impulse. Drinking, smoking and nights out are things that can be cut back on too. Perhaps you can downgrade your car to a cheaper model with cheaper insurance. If you can, try to start saving, no matter how small an amount. It will give you a safety cushion for unforeseen expenses. It is a good idea to set up a direct debit so your disposable income goes straight into a savings account before you can spend it!

This article has been written on behalf of; accountant specialists for freelancers, contractors and self-employed individuals.

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