Budget
Do you have a budget? Do you even know what a budget is? If you do, then it's likely that you're not in debt and so you don't need our help. But if you genuinely don't know what a budget is, then read on and learn how to avoid getting yourself knee deep in debt ever again.
Essentially, a budget is a well thought-out plan about how you spend your income. If you don't have a plan for your spending, then you have absolutely no idea where all your money ends up, how much is spent on what, and perhaps most importantly, how much money you will be able to save. What's more, people who don't have a budget tend to be the ones who spend all of their income each month, leaving little or nothing in their savings account for when emergencies suddenly arise.
If you want to make a budget to help you get your finances under control, then the first thing is to find out where all that money goes each month. This means that for the next month, you're going to need to write down each and every expenditure - your rent/mortgage, the food you buy, gasoline - everything you spend money on.
Most people who do this for the first time are usually very surprised at what they spend their money on. You'll be amazed at how much is spent on coffee in the morning, taxis or takeaways each night. A huge portion of our budget is taken up by what's known as "impulse buying", especially on luxuries and vices that we don't really need.
Once you know how much you are spending each month, it suddenly becomes a lot easier to put a stop to it. A good practice is to divide your expenditure into three groups. First of all, you have your necessities - things such as your mortgage/rent, food, utilities, healthcare costs, transport, credit card payments, insurance and so on.
In the second group go the things which are not really necessities, but are nevertheless still very important for you or your family. For example, if your child goes swimming each week, any expenses involved with this would be put into this category. Alternatively, if you belong to a fitness club, it's not a necessity but it is very important to keep it up if you can.
Finally, we have the third group, which is really unnecessary expenditure. Things like jewelry, that coffee you buy in Starbucks each morning, takeaways or meals at expensive restaurants, gambling, shopping just for the sake of it etc, etc.
In order to save for the future and give yourself a financial cushion against unforeseen circumstances, then you need to cut out the unnecessary expenditure. Whether it means skipping that Starbucks coffee each morning or cooking at home more often than before, the goal is to save around 5% to 10% of your monthly income, which can make a huge difference to your financial future.
Once you set yourself a budget, the most important thing is to stick to it! Do so, and you'll always be on top of your bills, debts will always be paid, you'll have savings in the bank for emergencies and you'll never have to worry about creditors ever again.
If you're really interested in setting up a budget and clearing your debts, talk to one of our debt consultants today! Their professional expertise is totally free so you have nothing to lose! More...
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