As the cost of living continues to skyrocket, you may be looking to ease the strain on your finances.
This may be stating the obvious, but there’s little point in trying to cut your costs if you don’t really know what you’re spending your money on in the first place.
Drawing up a budget that documents all your income streams and monthly outlays is the crucial first step towards regaining control of your finances. It’s not exactly fun, but it can be very enlightening, and you will no doubt come across a few surprises along the way.
(Note that this article looks strictly at working out your living expenses. If you have already completed this step, click here to view our article on reducing these costs.)
Devil’s in the detail
When it comes to your finances, knowledge is power. That means you need to assemble as much information for your budget as possible, taking note of not only your big monthly outlays, but every coffee and chocolate bar you buy as well.
Obviously you won’t be able to remember everything you purchase by heart, so keep hold of all your bank statements and get in the habit of requesting receipts when you pay by cash (or alternately keep a small notebook with you at all times to jot things in).
Ideally, you should take note of your expenditure over a period of a few months in order to get a more accurate reflection of your finances, as costs can fluctuate at certain times of the year - your gas bill will be far higher in the winter than the summer, for example.
Drawing up your budget
Now that you have all the data, it’s time to put together your budget.
Be sure to split it into various sub-sections, such as ‘home’, ‘transport’ and ‘entertainment’, as this makes it easier to identify the areas that you’re overspending on.
Here are two budget templates to help you on your way. If you are fairly computer literate and are happy to put your budget together online, then click here. For the traditionalists among you who would prefer to print your budget out and put pen to paper, click here.
Once you’ve finished filling it out, give yourself a pat on the back. Now that you’ve identified exactly how much money you have to spend each month – and how much is left over - you’ve given yourself a solid foundation for tackling your money worries.
Click here to view our article on how to cut those monthly costs.
