If you want to improve your budgeting ability, there are some top methods that you can use for helping your budget stretch further every month. When it comes to budget advice, it’s always best to consider making a monthly budget in a spreadsheet format or on paper so that you can prepare for any type of unforeseen expenses. Here are some of the main items that you should include in your budget every single month without fail:
Your income after taxes
The starting point for any budget begins with your income after taxes. Be sure to include any type of supplementary income that you might get such as government benefits, debts that may be coming back to you and more. This will help you to create a much more detailed budget and make sure that you can get through the month without having to go into any debts.
After placing your income at the top of the budget goes through some of the main bills that you will have to pay through the month. These can be items like your broadband, your smart phone payment, your car payment, bills for bus pass, student loans, house or mortgage payment, rent, etc. detail every single expense that will come out of your account in the month and the expenses that you will have to pay over the month.
Costs for essentials
After placing down some of the top items that you will have to pay for out of your income, you can leave room for some of your essentials. The cost of essentials usually has to relate to your budget for food, for clothing, for hygiene and basic needs that you will have every month. In most cases the average spent on just food per week per adult can be around £50. With these costs increasing due to the number of people in your family it is important to consider some of these basic costs as essentials for your budget.
Room for entertainment
A portion of your budget should also be allotted to entertainment. Squirreling away every last bit of money that you have extra isn’t going to give you a good quality of life. Having some room for entertainment can be an essential area of your budget. It can prepare you for things like dinners out, going to the theater, going to a concert, a night at the pub and more.
Room for savings
After you have completed a total list of the bills and essentials you should have a spot left in your budget for savings. It’s recommended first that you establish an emergency fund as part of your savings. By putting together an emergency fund you can work to make sure that you have something available to prepare for unforeseen expenses. This fund is something that you are going to be using in the event of something catastrophic. Usually it’s a good idea to save up around three times what your mortgage or home payment is so that you can have a comfortable cushion in times of difficulty. After saving up your emergency fund, you can work at allotting a portion of your budget automatically to saving and investing for your future. In most cases around 20% of your budget should go to your savings if possible.
By living by a budgeting rule of 50% reserved for your essentials, 30% for some of your lifestyle and entertainment choices and then 20% allotted for your savings, you can build a budget that’s going to be supportive to a great quality of life. It’s not always easy to reach this balancing point within your budget but by establishing an emergency fund and sticking to a rigorous monthly budget that will divide your salary into these categories, you can enjoy a much more comfortable life financially.