It is so important to understand your income and outgoings. By having a clear understanding and plan on the money coming in and what outgoings are in place and what you want to spend, you will be able to determine if your income supports this or be able to set a plan around how better to manage your money to allow this to happen going forward.
Budgeting is such a critical part of being an adult. Whether it is setting a budget to allow you to understand your finances better and spend less, or allowing you to manage and clear your debts, or build savings, knowing your money will help.
Here, is a guide as to how best to manage and budget your money going forward.
Understand Your Incoming Money
Before looking at outgoings and generating a plan to save, it is important to understand exactly how much money you have coming in from all sources. Best way to do this to look at a payslip, or bank and see how much you are earning and then to assess and understand how much income you have from other avenues such as benefits, rental income, or from any other source.
Review Your Outgoings
Secondly, you then need to understand your outgoings. To do this successfully list them all and how much you pay for them. This will be every commitment you currently have from rent or mortgage payments, childcare, car finances to monthly food shopping, gym membership, and anything else you are subscribed to.
Once this is documented you will be able to decide if what your outgoings are are realistic and in line with what you want to be spending. If the answer is no, this is the time to set a budget and work to it.
For example, if you are spending too much on food, set a budget for how much you are really expecting to pay (and is viable to support you and your household). From there you have a clear guide as to how much can be spent daily, weekly and monthly and can plan to make it work. For example, you may need to reduce the number of takeouts or meals out to support your budget and plan your meals and cook each night.
Plan For Unexpected Costs
Where possible it is always wise to be able to save a little bit each month so that you have a pot of money available for when those unexpected costs arise. These can be anything from unexpected medical costs, house or car repairs to hiring a talented team of car accident lawyers.
Now you know your outgoings, consider are they all needed? If the answer is no cut them out. There is no point in paying for a service unless you use it. It is also beneficial to shop around for household costs as changing providers may save you money. Once you start doing this it is good practice to review these frequently to ensure your money is working best for you.