The steps to creating your first budget

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Budgets are the simplest way to take control of your finances. While some people are naturally good at saving money most of us need some assistance. Budgets are the easiest way to track your expenses and take control. If you are having trouble paying all of your bills, feel that you are spending too much money on certain items, are arguing with your partner about spending or are saving for something special; budgeting is the solution you need. Read on for the way to get started.

Track your expenses

Unfortunately, you can’t start a budget unless you have a strong understanding of how much you have spent in previous months. If you have no idea how much you have spent then start tracking now so you are ready to do it properly in a few months and use estimates until that point. You could try and work it out by looking at your bank statements but the best way forward is detail and factual. There are many apps that can help in this area too.

Check your calendar

It is important to approach your budget from a yearly perspective. If you do a three-month budget but don’t take account of a gym membership that you pay yearly, you are missing some key items. Ensure you take account of any monthly, quarterly, semi-annual or yearly payments. Divide them by the number of weeks they cover and add them as a weekly expense.

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Identify goals

While it is good to save no matter what situation your life is in, it is also good to have goals. If you are planning to buy a house and have some kids or if you just want to go on a skiing trip for a week figure out what your saving requirements are and use that as your motivation to stick to the budget.

Emergency fund

You should factor in some savings for an emergency fund too. Things don’t always go to plan and you may need to afford car repairs, a new washing machine or to survive without three months of work. Plan an emergency fund and slowly build it up over time so that it can support you for three to six months.

Track your income

While it is easy to take account of your standard wage, ensure you are accounting for any side payments or work any gifts or alimony and factor it all in. Anything not included in your budget is not free fun money, it is a mistake in your budget.

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