Every home needs a budget. It doesn’t matter if you’re a millionaire family or on a seriously tight shoestring, you need a household budget. Having a good, working budget will mean that you always have control of your finances, rather than letting your financial situation have control over you.
You Need a Household Budget
How many times have you checked your bank balance and found there’s way less then you expected? Or even worse, not checked your bank balance at all because you’re afraid of what it might say.
Even if your household income is above average (in fact sometimes especially when it’s above average) it can be all too easy to fall into these traps. You find that you’re spending all month on credit cards, paying them off at the end of the month only to be left with so little that you’re forced to spend on them again.
But you can get out of the cycle.
How to Create a Monthly Budget
The thing with a good budget is that it needs to work with you, alongside family life. To do that, your budget needs to be adaptable and completely custom to you; you should be able to look at your budget at any point in the month and know where you’re at with it, as well as being able to make any amendments as necessary.
In order for your budget to be adaptable in this way, I recommend steering away from the good old pen and paper method (although that certainly does have it’s place in creating a good household budget).Your final budget, ideally, should be a spreadsheet that you can edit and update every month, or more regularly if necessary.
But, you will need to start with a pen and paper!
Write it all Down
Grab a bank statement (or open one via online banking if you have it), and spend some time writing down all your income and outgoings. Start by writing down all your income including payment dates and any benefits you get, such as Child Benefit, Tax Credits, and Universal Credit. Then move onto things that go out by Direct Debit & Standing Order. Finally, write down essential regular money spent like groceries and travel costs, including petrol.
Organise your direct debits and standing orders by payment date. This is also a great opportunity to assess what you really need in your life. When was the last time you went to the gym? If you signed up to the gym because you know you need to lose weight, but deep down you also know that you’re just not comfortable at the gym, then cancel the gym and go for a run.
The same rules apply to things like music and TV subscription services. Do you need Apple music, Amazon music and Spotify? Probably not, so just pick one and stick with it. As for TV, if you have Netflix, Amazon Prime Video, and access to all the main channels on Demand online, do you really still need to be paying for a cable or satellite TV service like Sky or Virgin? Just one to think about.
After you’ve finished with your essentials, it’s time to tot up the non-essential but regular expenses. By non-essential I mean if you see Starbucks cropping up on your statement 3 or 4 (or 34) times, then add those expenses up under the heading ‘coffee’. Once you’ve added up all your non-essentials, you need to really be honest (and tough) with yourself and set a realistic monthly budget for those things. Don’t kid yourself and remove these things from your budget in one fell swoop, because the reality is that you won’t stick to it, at least not in this harsh, cold turkey way. You need to break these expensive habits slowly and over time.
Remember, you need to live your life, too. Saving money is great, and many of us should and can. But your well-being and sanity is just as important, so if you have a weekly lunch with a friend that is the only time in the week you can be honest about what a pain in the arse your kid is, then don’t start cancelling just to save money! You need that, seriously! Maybe you could try to be a bit more savvy with it, though. Choose something healthier from the menu (the healthiest options are usually cheaper too), or simply suggest somewhere cheaper to meet.
The final step is to put all this information into a spreadsheet so that it calculates it for you. At the beginning of every month, all you need to do is check that everything is in order, add or remove or anything which has changed since you last checked, and add in any planned extra expenses for the month.
Planned extra expenses are things like birthdays, events you’ll be attending like weddings and parties, and things like school uniform expenses.
I Want to Save, Baby!
Now all the planned stuff is in, you can see exactly what you have left. If at this point you have enough left that you’d like to start a little savings pot, put that money elsewhere straight away. A lot of people make the mistake of keeping their excess in their main account ‘just in case’, telling themselves they’ll put away any ‘leftover cash’ at the end of the month. Leftover cash never happens – if it’s in your account, you’ll spend it.
How the Hell do I Create a Spreadsheet Thingy?
If you have a basic working knowledge of Excel, you should easily be able to create a simple spreadsheet which calculates;
income – expenses = what’s left?!
If you haven’t used Excel since secondary school and wouldn’t have the faintest idea where to start, then I have you covered. You can download a FREE already done for you budget calculator spreadsheet just below. It has space for everything you could need, totally customisable item headers, and will even work out how much you should be able to save each month and for the year.
Even better than all that, you can update it as many times as you like, meaning you will never again need to create or use another household budget calculator. EVER! This one will have you sorted for life.
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