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Budgeting for your Personal Finance

added October 20, 2006
Autor: Benedict Rohan


Most of us find ourselves having to part with our hard-earned cash
almost on a daily basis to just keep ourselves going. Have you ever
thought about exactly what you’re spending though? A great deal of
people never bother to budget – yet they could find themselves a lot
better off by keeping an eye on their income and outgoings. If your
finances are starting to get the better of you and you want to know how
to manage your money more effectively, read on.

Work out your income and outgoings

First, decide whether you’ll do a monthly or weekly budget, whichever
suits you best. Then write down all your income. (e.g. salary,
benefits, pension). Now list your outgoings (home loans, remortgages).
Don’t forget those that you only pay on an annual or quarterly basis –
which you’ll need to break down to a weekly or monthly amount. Here are
some common household expenditures:

  • mortgage or rent

  • home insurance

  • council tax

  • utilities (gas, electricity, water, phone)

  • TV licence

  • car tax

  • car insurance

  • petrol

  • car parking charges

  • travel to work (public transport)

  • credit cards

  • overdrafts

  • loan repayments

  • groceries

  • childcare

  • pocket money for kids

  • vet bills

  • luxuries (going out, clothes, presents)

  • holidays

    • Tally up your total outgoings and subtract them from your income, and
    what’s left over is yours to spend – or save if you’re wise. If your
    outgoings are more than your income, alarm bells should be ringing. You
    won’t be able to sustain this on a long-term basis and you’ll quickly
    find yourself in more and more debt. Now is the time to sort it out.
    You know where you stand with your income and outgoings, so you can now
    make changes and improvements to the way you manage your money. Below
    are some tips to help you cut down your spending and increase your
    savings.

    Save, not spend

    There are lots of ways in which you can live more efficiently, and a
    little goes a long way – if you save just £1 a day, you’ll have
    £365 in a year! So everything counts:

  • Cook at home rather than buying ready meals and takeaways or eating
    out.

  • Cut down on your treats – CDs, clothing, make-up etc. The best way
    in which to do this is to give yourself a budget and stick to it.

  • Don’t buy designer labels or expensive brands – cut down by
    purchasing high street clothes or the supermarket’s own brand of
    groceries.

  • Just make your own lunch, or don’t buy coffee at work, and you’ll
    easily save it.

  • Give up smoking – it’s an expensive habit.

  • Switch off unneeded lights in your house.

  • Find out whether you’re entitled to any benefits. The government
    has various tax credits and allowances for individuals and families on
    low incomes.

  • Open a savings account if you don’t have one and set up a standing
    order to ensure that some of your income goes there every week or month.

  • Tax-free savings accounts such as ISAs (Individual Savings
    Accounts) allow you to save a certain amount each year without paying
    tax.

  • Leave your savings alone – once they’re in your savings account,
    they’re untouchable. The more you have, the more you’ll make in
    interest.

  • Check regularly how your savings are performing and move to a bank
    account with a better interest rate if necessary.

  • If you get a bonus or extra cash, put it in your savings before
    you’re tempted to spend it.

  • Don’t buy anything on credit unless you really have to – and only
    then if you know you will have the means to pay it back. It’s a much
    more expensive way to shop, as you’ll pay back more in interest.

  • Most people start to have problems with debt when there’s a major
    change in their life circumstances, such as getting married, changing
    job, moving house or starting a family. If any of your circumstances
    change, revise your budget and make any necessary adjustments.

    • If you’re still struggling …
    … don’t sweep the issue under the carpet. The longer you ignore your
    money problems, the bigger your debts will get. We live in an expensive
    world nowadays and many people struggle to get by – so there’s nothing
    to be ashamed of. There are lots of organisations who can provide
    specialist help on debt management – for example the government
    Insolvency Service, Consumer Credit Counselling Service and the
    Citizen’s Advice Bureau. They’ll give you free practical advice to help
    you get your finances back on track.

    The first thing to do is to make a list of everyone to whom you own
    money, and sort the list into priority and non-priority debts. Priority
    debts are those that are secured against your home or could have
    serious consequences such as you being evicted or taken to court, and
    these must be tackled first.

    Then speak to your creditors, for your priority debts first. They’ll be
    a lot more understanding if you explain your situation to them than
    they would if you tried to ignore their payment demands. Run through
    your budget and try to negotiate a repayment plan that’s manageable for
    you.

    Once you’ve managed to repay all your debts, don’t let yourself get
    caught in the same vicious circle again. Live within your means, don’t
    be tempted by credit or ‘buy now, pay later’, and keep a close eye on
    your budget and expenditure.

    Biography:
    Author: Benedict Rohan
    Website: http://www.mortgagenation.co.uk
    Benedict Rohan works as a freelance finance writer. Commercial Mortgage, Homeowner Loans, Remortgages

    Most of us find ourselves having to part with our hard-earned cash almost on a daily basis to just keep ourselves going. Have you ever thought about exactly what you’re spending though? A great deal of people never bother to budget – yet they could find themselves a lot better off by keeping an eye on their income and outgoings.

    Biography:
    Author: Benedict Rohan
    Website: http://www.mortgagenation.co.uk
    Benedict Rohan works as a freelance finance writer. Commercial Mortgage, Homeowner Loans, Remortgages
    Content: http://www.articlerich.com/
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