With the cost of living crisis still ongoing and showing no signs of slowing down, working out a realistic budget for you and your household can prove really beneficial, especially if you’re worried about how to make your finances stretch.
Without keeping account of everything, it can be very easy to overspend – but it can also be difficult to track everything, which is why budgeting can be a useful strategy to employ.
By sitting down and seeing what your income and expenses are each month or even week by week, you’ll be able to see what cash needs to be diverted where and what you’ll have left over once all your priority payments have been made.
The first step towards devising a budget is to take a look at your most recent bank statements and payslips, as well as your bills and credit and debit card statements. It can also be useful to keep the receipts for anything you use cash to pay for, as this will help you calculate a realistic idea of what your expenditure is each month.
Accuracy is important if you’re to come up with a workable budget but, as a good rule of thumb, it’s better to overestimate your figures than underestimate them if you’re unsure of anything so you can give yourself a bit of a cushion.
It’s also important not to rush the process. It may not be the most exciting endeavour you’ll ever undertake but it will pay for itself in the end and help give you greater peace of mind that you’ll be able to weather the storm of the next few months successfully.
Another factor to consider when putting your budget together is any one-off spending you’ll need to make. With Christmas just around the corner, this is certainly something that will be a feature in many budgets over the coming weeks, but don’t forget about upcoming birthdays and other such events either.
Once you’ve finished writing your budget, you may find that your outgoings exceed your income, which means that you’re living beyond your means (1). If you find yourself in this situation, you can look at your budget and see which areas you may be able to cut back on to help you get back in the black.
It may be necessary to be quite strict with yourself, cutting back on entertainment such as going out less or cancelling some TV subscriptions. Reducing your grocery bill could involve switching to home brands, while carpooling could help you reduce your travel costs and keep petrol bills to a minimum.
Once you’ve been through your budget and made some cuts as and where you can, you can then update your budget to reflect these changes.
If you still feel as though you’re overspending despite the fact that you’ve reduced as much of your expenditure as possible, it may be advisable to consider getting in touch with someone for expert debt advice to help you keep on top of your finances.
If you are struggling with debt at the moment because of cost of living challenges, get in touch with us today to see how we can help.
References:
1. https://www.stepchange.org/debt-info/reducing-your-spending.aspx
