How to get your new year household budget in order
A strong household budget is the foundation for any family’s finances. If you don’t know exactly what you’re bringing in and what you’re spending it on, it’s easy to lose track of your money and you could even run out before payday.
If you often find yourself struggling to pay your bills, take a look at our top tips for putting together a budget for everything you earn and spend.
Advertisement
Hide AdAdvertisement
Hide AdStart by writing down how much you earn in a month from any source. That’s your wages from any jobs you do and any benefits or regular bonuses you get.
If you don’t always earn the same amount every month because you’re a freelancer or you work shifts, look at the last three months’ earnings and work out an average. Use this figure in your budget.
Next, make a list of all of your monthly bills and how much you spend on each one. If you have any bills that you don’t pay every month – like your council tax – work out a monthly budget amount for these. Don’t forget to allow for annual costs – such as birthdays and Christmas.
You should also include your other outgoings and financial commitments – like the amount you spend on food, coffee at work, holidays and clothes. Once you’ve done this, add everything up to get a total figure for all of your outgoings.
Advertisement
Hide AdAdvertisement
Hide AdSubtract your total outgoings from your total income. The figure you have left is your disposable income. This is how much you’ve got to spend on anything else you didn’t include in your budget – perhaps treats like meals out.
If your monthly disposable income is low (or if you don’t have any at all), see if there are any areas in your budget where you can cut back. For example, do you use the gym enough to justify your membership or is there a cheaper alternative? And could you make your own lunch instead of buying it at work?
Once you’ve adjusted your budget so you’ve got a bit more disposable income at the end of the month, you need to look at what you want to do with this. And one of the best things you can do is start putting some money aside for the future.
You don’t even need to save up with any goal in mind. Just putting together a rainy day fund could help you to stay on budget if you ever have an unexpected bill to deal with.
Advertisement
Hide AdAdvertisement
Hide AdFor example, let’s say the clutch went on your car and it would cost you £100 to get it fixed. If you didn’t have an emergency fund, you might have to wait to fix your car, or struggle to afford your other bills. That’s why it’s a good idea to start thinking about putting your disposable income to one side – and you could keep your budget on track for the whole of the year.
Debt Advisory Centre: 0161 871 4881