How to make a budget and stick to it

Once you’ve worked out your total monthly income, it’s time to work out how much you’re spending each month.

It’s important to note that at this stage, you’re only trying to understand what your spending looks like, not change anything. It can be tempting to start moving things around now, but it’s important to get an accurate picture of how you spend your money before you do anything.

Start by gathering together as much information as possible so you can base your budget on facts rather than guesses. You’ll usually be able to find the information you need through bills, direct debit agreements, bank statements and receipts. How far back you look at this information really depends on how detailed you want to be. If you want to understand your spending behaviours in detail, looking back at the last year can give you a lot of information, but if you’re happy with an overview, looking back over back over the last few months should be fine.

Once you’ve found your spending info, add it all up to see what your outgoings cost you each month. To help this feel a little less daunting, we’ve broken it down into categories to help you work through things item by item.

Household billsRent or mortgage paymentsGasElectricWaterCouncil taxInternetTV licenceTV packageLiving costsFoodClothingToiletriesHome supplies such as cleaning products or non-food items you buy regularlyMedical costs, such as trips to the dentist, prescriptions etcHome maintenance costsFinancesInsurances, including home, car, medical and life insuranceLoan paymentsCredit card paymentsSavings and investmentsPension contributionsOther regular paymentsTravel costsFuel costsMOT testsCar maintenanceRegular public transport costsLeisure costsHolidaysSubscriptionsStreaming servicesGym feesEating out/ takeawaysGifts for birthdays / Christmas etc.

As you work through this list, you’ll probably find that some items only crop up once a year, such as your MOT or Christmas and birthday presents. So for these ones, take the cost of it and divide it by 12 to give you the monthly cost.

Author: wpadmin

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