By Brian McKay

Be honest. How much do you know about your current financial situation? When was the last time you opened a bank statement or had a good look at your accounts online? Do you know exactly how much you earn each month, how much you spend and whether or not you’re in debt? Many of us try hard to stay hard in the black, but this is not always plain sailing. If you’re worried about your finances, it’s worth taking time to draw up a simple budget. It sounds dramatic to say that this could change your life, but it’s so important to have an accurate view of what’s going on in those accounts and how much you can afford to spend. If you don’t have a budget, you’ve come to the right place!

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The basics of budgeting

Budgeting is a technique, which helps you to plan how you’re going to spend your money and enable you to keep track of payments that are coming into and going out of your accounts. In the simplest form, a budget is two columns of numbers. One represents money coming in, and the other represents your expenses. In order to stay afloat, you need to find a balance and make sure that you haven’t got a deficit between your income and your outgoings. If you’ve never done a budget before and you tend to just hope for the best, being a little more organized could have a really positive impact on your financial situation. There are several different ways you can budget including using apps and spreadsheets or resorting to old-fashioned pen and paper. You’ll find sites like WiserRobo helpful, especially if you’re looking to use budgeting techniques to try and save or make more money. Once you’re used to budgeting, it will become a way of life, and you’ll probably wonder how on earth you managed before you started crunching numbers and paying attention to your statements. When you are doing a budget, it’s useful to have a list of payments that you make on a regular basis and one-off expenses you plan to cover during that specific time period. At Christmas, for example, you may find that your additional expenses are much higher than normal.

Why budgeting is so important

When you carry cash, or you’re making contactless payments on a daily basis, it can be really difficult to keep track of how much money you’ve spent, and this can easily lead to overspending. If you’ve got no idea how much disposable income you’ve got per month, there’s every chance that you’ll end up spending cash that should actually be earmarked for something else. Budgeting doesn’t take long, it’s easy to do, and it can have an incredibly positive impact on your finances. With a simple budget, you know exactly what you can spend, what you can save and what you’ve got to pay for in the coming weeks or months. You can identify potential pitfalls, such as a shortfall in the run-up to the holidays, and this can help you plan ahead and prevent unexpected surprises.

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If you don’t already work to a monthly budget, now is the time to get organized and start figuring out those numbers. You won’t regret it!

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