The word ‘budget’ has been thrown around a lot recently – and it’s not hard to see why.
With inflation rising, food bills soaring and household bills sky-rocketing (and set to increase again in autumn), we are all feeling the pinch.
We’re being told to create budgets left, right and centre to help with these rising costs – but what does this actually involve?
Sure, you can see the money coming into your account and plan how much you want to try and save and spend every month – but not having an idea of where your cash is going means spending can creep up.
So, how do you practically go about making a budget, if you’ve never made one before?
For example, is it best to do it on paper, via an app, or on Excel?
If you’re asking yourself these questions, you’re not alone.
Experts are on hand to guide us through on where to start, quite literally.
How do you do it?
Julian House, the managing director of My Favourite Voucher Codes, says the best place to start is to create a very basic table and plot out your monthly costs.
‘This way, you can see exactly what you’re spending money on and it’s easier to spot ways to cut costs,’ he tells Metro.co.uk
‘It can simply start with two columns – the type of cost on the left and the cost itself on the right.’
Then, once you’ve done this, you can expand on this to track your weekly spending – by adding a dates row on the left hand side for each day that goes by.
‘Create the document with rows outlining the dates in the month and the columns outline the transactions (and you can use your bank statement to speed up the process),’ explains Jessica Narweh, a business and money coach.
Then, at the end of the week, just update it with everything you’ve spent.
Simply add every item and how much it cost on that day – for example, in the June 29 row – ‘travel’ might go in the type of cost column, and ‘£7’ might go in the cost itself one.
You might add another June 29 row for your lunch, too.
This is handy for finding out what your approximate monthly spending is, then your can compare it to your monthly income to settle on a saving goal.
Where is the best place to make this budget?
‘When creating a budget, you might be lost on where to physically create it to start with – Google Docs, Microsoft Excel or an old-fashioned piece of paper. Truthfully, each way has different benefits and everyone will have a different preference,’ explains Julian.
If you prefer the old-school writing by hand way, you might want to invest in a designated notebook.
But if you decide to use Google Docs or Google Sheets, one perk is that you can access the files on different devices – depending on where you are.
‘It’s practically the same as a physical notebook, except using technology,’ adds Julian.
‘If using Google Docs or Google Sheets is a bit overwhelming to use on your phone, you can list bullet points on your Notes app to add to your official budget whenever you’re next in front of your laptop or PC.’
Alternatively, you might decide to use Microsoft Excel, where you can use formulas to help organise your budget and eliminate the risk of human error.
‘However, using Excel can be quite intimidating for a lot of people,’ continues Julian.
‘So I would recommend searching for a tutorial on YouTube. There are lots of super easy tips and tricks that can really optimise your spreadsheet and will make budgeting so much easier for you.’
How often do you go back to your budget?
Making the budget is just the first step, you need to be sure you’re regularly updating and checking back into it – to keep it as up-to-date as possible.
‘Once you have a system that works for you – whether it’s on paper, Google Docs/Sheets or Microsoft Excel – I would track your spending on a week-by-week basis and review your budget at the end of each month,’ Julian adds.
‘You need to be flexible and realistic with yourself and it’s almost inevitable that your exact plans will have to change sometimes, especially amid the cost-of-living crisis.’
Update your budget every week with what you spend that week. Then you can see how much you have left for the rest of the month.
How to organise your money for your budget
One way of keeping a track of your spending during the month – and stopping any unexpected surprises – is to separate your money into different accounts.
Jessica Narweh, a business and money coach, says: ‘I recommend a “bills” account, “savings/investment” account and a “spend” account. The spend account is an account that you can spend freely on food, gifts, going out with friends/family all within a certain limit. This stops overspending.
‘You should transfer a set amount to these accounts once you get paid. You can use various digital banks for this that allow you to create “pots” to separate your money.’
Do you have a story to share?
Get in touch by emailing [email protected].
Source: Read Full Article
