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How to Create a Life Budget

July 2nd, 2012 | 1 Comment | Posted in Business

Constantly find yourself living in your overdraft? Try to save for things but rarely achieve it? Go to the cashpoint only to find you’ve underestimated what you’ve paid out?

It’s a common problem. Many of us struggle to keep control of our finances, ensure all our commitments are met and still have some left over at the end of the month.  Whatever you earn, following some key rules can really help improve the way you manage your money.

The first rule?  Be honest with how much you’re spending and on what.  Most of us keep a mental track of what we are spending, but many of us vastly underestimate just how much we spend and when, then when we go to the cashpoint find our balance is not quite what we expected.

Making a note of what you spend each day can be very useful, if a little cumbersome.  The best place to start is by setting out a life budget to help you manage the commitments in your life and a more positive financial outcome.

Make a list of all of your outgoings and how much you need to budget each month, such as:
Mortgage/rent – probably your most significant expense.
Car and travel – if you are struggling to meet expenses, give some careful thought to your needs.  Do you really need to own and maintain a car?
Utilities –this is a critical expense, but make sure you get the cheapest gas and electricity to minimise your regular payments.
Insurance – whatever insurance you have and need, make sure you regularly review your cover and payment terms.
Mobile phone – again, critical for most of us, but make sure you shop around for the right deal to suit your needs.
Food/housekeeping – be honest, how much do you really spend and can you be more economical? Many of us eat out very often and have excessive supermarket bills, try buying what you need as you go, you could save a third off your shopping bill.
Clothes/social – think about what you spent last month (actually) and budget appropriately.
Savings – no matter how much, it is important to try and contribute to saving regularly.

Setting up an Excel spread sheet with a monthly planner listing all your outgoings can really help focus your mind on your money and actual commitments.  More importantly, it can help you forecast for the year including planning for major expenses and savings goals.
Always keep an eye on your bills and make sure you seek out the best deals on everything you purchase.