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Budgeting Tips

So what would our top tips be when it comes to budgeting? Here are a selection of hints and tips to keep you on the right track.

Be honest with yourself

It's amazing how easy it is to be tempted to massage the figures. Many people don't sit down and calculate their personal budget unless they have got some financial concerns. Yet those same people soon want to convince themselves that things aren't as bad as they first supposed. Although that may truly be the case, it's equally clear that this view may be formed as a result of some rather subjective "figures".

Try to avoid estimates

Most of us aren't very good at estimates. We might know how much a pint of milk is likely to cost at the supermarket. That's because it may be a purchase that we make on a very regular basis. But we're not very good at estimating how much things cost if we only ever pay for them on an annual basis.

If we only pay for services via direct debit then we may be even less certain of how much they cost each week, month or year. That's why it's important to avoid estimates when drawing up a budget. Try to use the actual figures where possible.

Get the true picture

You need to build up a comprehensive picture of how things currently stand. If you don't manage to find out where things are at right now, then you'll undoubtedly struggle to create a budget moving forward.

The important thing with budgeting is to be realistic.

Think about what you really need

Are there some things that you can buy that you could do without? Most of us, if we are honest, realise that there are some purchases that we make out of habit. We don't really need them - we're just used to buying them. If you're trying to get your spending under control then these are the areas that you may want to look at first.

Don't remove all the fun

Any budget that you create needs to be realistic. The truth is that we all need to have things to look forward to. We all need a few special treats. So don't exclude these completely from your plans.

If you do exclude them then you may find that you're not having much fun. As a result, you may find it harder to stick to your budget.

Update your budget

Your budget plan shouldn't be left to rot in a drawer, file or cupboard. It should be something that you consult regularly. If you don't do that then how will you really know if your finances are still on track?

You'll also want to update your budget on a regular basis. This is because there's a good chance that your financial circumstances will constantly be changing. If you don't update your budgeting spreadsheet or records to take account of these changes then you may find that things get out of hand.

Budgeting tips: conclusions

The above list is not meant to be exhaustive. It is, rather, a useful starting point. Think carefully about your budgeting aims and try to be realistic about these and the process.

Maintaining an individual (or family) budget is a useful exercise. But, like so many things in life, it's only ever as good as the effort that you're prepared to make.

More about budgets

Are you interested in reading more about budgets and financial planning? You can read our personal finance guides for further information on these and related subjects.