In the last few months, living costs have increased significantly, and it has become more difficult for people to make ends meet.
Budgeting has become a necessity for most households to keep up with the rising costs of living which are not showing any signs of slowing down at the moment. The impending energy price hikes in Autumn are once again a growing concern for most and something that people are having to forward plan for.
If you’re struggling with your budget or ability to budget then this article may help. It will cover the following points:
– How to create a budget in light of rising cost of living costs.
– The five essential steps to creating a budget.
– The importance of sticking with your budget.
– Tips for how to stick with your budget.
How to create a budget in light of rising cost of living costs
It’s not always easy to figure out how much money you need for your monthly expenses, but it’s important to create a budget.
A budget can help you determine how much money you can afford for a particular expense such as rent, groceries, or transportation. You can also use your budget to see if there are any areas where you could cut back on spending so that you have more money available for other things.
A good way to start creating a budget is by figuring out what your monthly income is and then looking at what your monthly expenses are. You might be surprised by how much money goes towards non essential things like subscriptions and memberships that you may not be benefitting from like the gym. In your personal circumstances you may find that these aren’t necessities but still cost a lot of money each month. A good starting point is cancelling such services that you may not be using. Get a copy of your bank statement and look to see which direct debits and standing orders you may be able to cancel. You may find automatic payments going out for things you had forgotten about and no longer need to pay out for or no longer wish to continue paying for in light of the necessity to cut back and saving your money for essential spending.
The five essential steps to creating a budget:
1. Determine your income and expenses:
The first step to creating a budget is to figure out how much money you make and how much money you spend.
2. Create a list of your monthly expenses:
Create a list of all the things you spend money on each month, from rent to groceries to entertainment.
3. Create a list of your monthly income:
Create a list of every source of income that you have, including salary, bonuses, dividends, interest and more.
4. Subtract your monthly expenses from your monthly income:
After listing all of the sources of income and all the sources of expense, subtract one from the other to find out how much money is left over at the end of each month for saving or paying off debt.
5. Finally, create a plan for what to do with your leftover money and put it into action!
The importance of sticking with your budget
The first step to sticking with your budget is to calculate how much money you make per month. This will help you know the amount of income that is coming in and going out of your account. From there, it’s easy to see what areas are lacking and what can be cut back on until they are corrected.
If you stick with your budget, it will help keep track of where all of your money is going and just how much goes into savings each month.
Tips for how to stick with your budget.
- Go through your income and expenditure regularly and review all your outgoings to ensure you still need to be paying all of them.
- Transfer funds to your savings and spending/budgeting accounts on pay day so you know your various money pots are topped up accordingly.
- Try and have a separate account from which all your essential monthly direct debits go out so you know all your monthly commitments have been met.
- Keep your every day spend/fun money in a separate account so it’s easy for you to keep on top of the monthly amounts you have allocated yourself to spend on your every day expenditures and for monthly outings and social commitments.
- Do not dip into your other pots to use funds for things they are not intended for.
In the current climate the reality is that people are likely to be unable to make ends meet and may need to turn to borrowing. This should be avoided wherever possible but if you do start looking into borrowing then always do your research and compare the best options for you including finding low interest rates on loans or interest free credit cards.
Debt consolidation may also be something you look into to decrease your monthly outgoings. There are short-term financial solutions out there regardless of your situation, for example if you struggle with bad credit or if you’re a student looking for student finance options click below for more information on how to get a student loan https://www.creditloan.com/