How to Create a Simple Budget

I promised in my first post I would write a bit about personal finance. And the best tool to gain control of their finances is to create a separate budget. This allows you to influence your financial situation in a structured way.

Take a wild guess

The first thing to do is perform a simple exercise. You sit down with pen and paper summarizes your income and expenses. And this without looking at the bills or bank statements. This will give you a feel for how much control you really have.

How does your budget look like today?

Get your account statements, pay slips, receipts and other documents that tell about your spending.

Time for you to summarize your Income. It is likely that part of the budget that you have most control of, or? Add up how much you get out (after tax) per month from you Salary, unemployment payment, pension, parents money etc.

The expenditure is however a bit difficult to have a feel for. Review the following headlines and summing up all the expenses. On the next page you'll see other fixed and variable costs.

Variable costs (food, clothing and footwear, leisure, personal hygiene, public trips, doctors, savings, other costs). Fixed costs (home insurance, other insurance, childcare, trade fee, media, other loans). Accommodation expenses (Loan, Running Costs). Car (tax, insurance, tires, repairs, service, fuel, parking fees, car loan). Tips on tools to calculate loan interest and a good bank.

Analyze what you have found

Now is the time to look at what you have found. Take out what you guessed and compare what the actual outcome was. Calculate how an average month look out for yourself and see if you have a surplus or deficit.

Net income per month - Cost per month = Surplus / Deficit

Set goals and develop how to reach them

From the analysis, you have probably found some items of expenditure which need to be fixed. Take a handful of specific items to work with. Set goals for these items and start working. You may want to also bring up how much you will earn on its implementation. Develop a plan for how you should proceed to achieve the goals. It may be useful to develop a picture of what to do with the money you will save. This will give you an extra motivation when it's tough to stick to the plan.

Keep track of your progress

The last step is the most important. You must track your results. If you do not, chances are that you end up with your budget. Set a date when to sit down and go through everything. Then look at what has not gone as well but also what has gone well. Do not forget to praise you for your work - do not be too hard on yourself at first. It will take time to work it into your everyday life. It takes time for all.

The video sums it up in point - (thanks to: best-loan-uk.net)

good luck