Have you decided that it’s time to take control over your finances once and for all? Millions of Brits do so every year and it’s always for a wide variety of reasons.
It could be that:
Whatever reason you’re choosing to do this right now, it’s a hugely positive step. To have a life where you can enjoy yourself, set aside money for a rainy day, have a “fun” fund and know that, when your head hits the pillow at night, the last thing you think of before you go to sleep and the first thing you think of when you wake up is NOT money – this is a wonderful place to be in life.
It will be our pleasure to help you get there with a personal budget spreadsheet. Let’s start.
There are two calculations you need to do to find out if you’re living within your means or you’re spending more than you can afford. You have to figure out what is coming in and what is going out.
For your incomings, you need to add up the following:
Make a list putting each of those income categories in one column and the amount you earn from each source in the next column. Do these same for the last three months. You may need your bank statements for this.
Add up the totals for the three months and then divide by three to get you average monthly income.
The next thing to work out is what’s going out of your bank account. Again, add up the following items of expenditure for three separate months and then divide by three to figure out your average monthly outgoings.
Things you need to calculate include:
It’s a long list but doing this will give you the best snapshot available of how you spend the money that you’re earning.
If the amount you’re earning is a lot more than the amount you’re spending, you are doing well and you should be fairly well financially insulated against any shock like an unexpected bill or temporary lack of employment.
If the amount you’re spending is more than you’re earning, you’re heading for trouble.
If there is not much difference between the figures, not much would have to change to make your financial situation difficult to manage.
Whichever category you’re in, you can always spend your money better, giving yourself more cash to put into your emergency fund, pay debts down, and occasionally give yourself and your family a treat.
Now you have a clear breakdown of where your money is going, there are a number of quick and simple ways you can spend less money each month without making a significant difference to your lifestyle including:
Do these and you might save up to £4,000 a year. It’s not just about spending less though. You can raise money quickly by:
Most financial experts believe that you should have three months’ running money to cope with emergencies. The typical types of financial emergencies that families have to cope with include:
The answer is different for every family though. Try to think about a level of cash in your bank that you believe would give you emotional comfort – a place in your mind where you feel you are on top of your finances.
There are a number of mobile phone apps available that help you budget. Popular free options include Money Dashboard and Cleo. Spendee is free but offers an enhanced paid-for option for £1.60 a month and Squirrel (£3.99 a month) works with a Barclays account to help those who struggle to stay in the black.
All of these apps are compatible with Apple and Android phones.
Being canny with your finances means less time worrying about money and less need to borrow money or use your overdraft.
You can save for some of the nicer things in life as well as having cash put aside for a rainy day.