It is widely known that the pathway to financial freedom is budgeting the income and outgoings that grace your bank account. The thing is, if you’ve never been a position where you’ve had to watch the pennies, budgeting is going to be as foreign as the currency you changed for your last abroad holiday. It’s a daunting task for someone who is used to spending as and when they please. Having to swap from whipping out the card for contactless wherever you go to only bringing cash to the shops is a difficult adjustment. Circumstances change, and they can change quickly – especially when recession hits.
The most common time that people need to watch the pennies is in the event of job loss. When you lose a job that you rely on to survive, any regular outgoings that you have committed to automatically become a worry. The rent or mortgage payments that keep a roof over your head are suddenly compromised. The research you were doing into debt consolidation personal loans to minimise those commitments has just been blown out of the water – after all, you need a job to qualify for finance! Job loss is tough and articles like this one can tell you how you can get yourself through it. Unemployment benefits are there to help, of course, but they’re not a long-term solution to the problem in front of you.
The second most common is when they have a family. Families are expensive; it’s a widely known fact. By the time you’ve added the extra food to the shopping, used the heating more than you’re used to because of the children in the house and spent the extra money on the electricity for all the games consoles, your purse wants to cry. Family life isn’t cheap – even though it brings you riches in love and happiness, neither of those things keeps a roof over your head or a hot meal in your stomach!
The answer? Learning to budget. Budgeting can reduce the stresses you have in your outgoings each month and bring some order into your already stretched wallet. You may be a total newbie when it comes to budgeting your money, but that doesn’t mean you can’t do it. Living to a budget doesn’t have to be something that is scary, nor does it have to be reserved for those in financial hardship. If you are quite flush and have a bank account that is healthy to look at, you could still budget your money. This is especially effective if you want to buy a house; budgeting allows you the chance to save up your surplus money for a deposit. When it comes to learning how to budget, you have to let that budget fit into your lifestyle rather than trying to squeeze your lifestyle into the budget you have.
To begin, you need to look at what your income and outgoings look like on your bank statement. Write out a list of your necessary expenses on a spreadsheet, such as rent/mortgage, utilities and food. Then add on the expenses that are secondary to those, such as internet and phone costs and what you spend on travelling to work every day. Look into what you spend on debts and socialising each month and by the end of this exercise you should have three lists of outgoings and possibly a glass of wine, you know, to help you cope with the truth of what you spend each month. Subtract your total outgoings from your income and you should have a round figure of what’s left at the end. This is possibly where it gets confusing. If you find yourself living wage to wage each month, you may be shocked about this supposed cash you have left to play with. This is where you look at those odd coffees while out shopping, that lunch you bought that time because you forgot to make it. That money you paid for a new outfit or a taxi home when it was raining. All those small expenses here and there eat into your disposable income and leave you waiting for payday with bated breath!
Shop around for your utilities bills using price comparison website like the ones here, and do the same with your internet and phone provider. You may be really happy with the service you get, but you could find that same service elsewhere for a lot less money. If you have a lot of small debts each month, consolidate them like you always planned to so that you go from four or five payments a month to just the one. This will help you to make savings while paying your dues at the same time – winning! When it comes to buying those odd coffee treats or paying for the odd taxi, that’s going to be up to you. You could buy a reusable coffee cup and bring a coffee to work with you every day. Swap your car on the commute for a monthly bus pass or better yet, get fit and walk, saving your gym membership.
Living in a frugal way doesn’t mean cutting the fun out of your life, but it does mean paying more attention to your cash. If you’ve been turning a blind eye to your finances and hoping for the best every month, you need to wake up and smell the freshly brewed coffee. Unless your income is a bottomless pit, you need to be sensible about where your money is going and ensuring that you have savings for those rainy days of not much to do! Savings will also help you out of a hole if you were to lose your job, paying the basics until you secure something new. Budgeting doesn’t have to be a drag; think of the holidays you could have if you learned to save up for them! Part of adulthood is learning to manage your money, regardless of how much or little you have. You’ve got this – trust us.
Featured Post – please see disclosure page for details