We all struggle sometimes when it comes to money. We never seem to be earning quite enough and we always have mounting expenses.
Getting your finances in order may, however, be easier than you think. Some simple financial planning can go a long way to changing your outlook. It may not sound like the most fun task in the world, but it could make things considerably more simple in the long-run.
So let's take a closer look at how you might go about setting up a typical budget. We'll consider how it all works and why it's a good idea.
Getting your finances in order
If you're currently feeling like you're swamped by financial concerns, then it's certainly going to be useful to take a look at your options. Some good planning can help you to identify what you're currently spending and why you're having problems.
You may think that you already know what you're spending your money on. But actually taking the time to note it down can have a massive impact. Most of us are pretty surprised when we see everything written down for the first time. We start to realise that we spend more than we really need to in certain areas.
Once you've identified your current budget, you can then take a look at how you can get that spending under control. That's the second phase of personal budgeting.
Calculating your income
You might like to start with your income. Many people find that this is the easiest place to start because most of us have fairly few sources of income. So it shouldn't take you quite so long to work this bit out.
Start noting down all of your sources of income and how much they provide you with each month. You may want to consult pay slips, share dividend certificates, pension statements and other such pieces of information here. Don't forget that you're looking for figures that are after tax has been paid. You're trying to establish a true picture of how much arrives in your bank account each month.
Calculating your expenditure
We said that income was the easy bit, so hopefully you're prepared for a bit more of a challenge here!
Thinking about how much you spend on all aspects of life will give you a great insight into your financial situation. You'll need to think carefully and to be honest with yourself here. You want to get a complete picture of the situation.
If you've got bills and receipts handy then this will make things a lot easier. If not, you'll need to try and come up with some accurate estimates. By the time that you've finished, you should have a comprehensive view of your spending habits. You should have a complete picture of how much you spend on absolutely everything, from housing costs to entertainment and takeaways.