This is a guest post from Rhian Westbury, a fantastic lifestyle, travel and money saving blogger.
Planning a budget can feel like a daunting prospect, especially if you’re self-employed and don’t always have a regular payday. Planning a budget isn’t about stripping out all the spending which makes you happy. And it isn’t about cutting down on absolutely everything, otherwise you’ll feel deprived and never stick to it.
I’m sure we’ve all been in situations where half through the money we’ve pretty much run out of money and we have no idea where our money has run off to. Budgeting can help ensure you always have money for the things you need and that you prepare for things you know are coming.
Here are a few tips on how you can try planning your budget:
Make a note of your regular expenses
These expenses will be the things that don’t change each month, and they’re usually the thing which come out on direct debit such as rent/ mortgage, home bills, subscriptions, gym. membership, car finance, phone/ internet etc.
Once you’ve noted down all your regular expenses you’ll probably be shocked at how much of your monthly money goes on these things. And if you don’t then I am very jealous. Some things you’re not going to be able to change like mortgage and car finance but this is a good chance to review your spending.
Do you need two beauty subscription boxes? Could you switch to a sim only mobile contract or save money on your phone bill? Do you need both Now TV and Netflix? Honing in on your regular expenses and how much you spend on them will help.
Create a secondary account for your regular expenses
If you don’t do this already then it’s one of the simplest things you can do to help you budget. Create a secondary account for all those regular payments or bills and change the money to come out from here as opposed to your everyday account. Then each time you get paid send one transfer of money for everything that’s due to come out during the month. If you’re paid weekly then split this over 4 and transfer some money in each week to cover.
This will help if your direct debits are scattered all throughout the month as you’ll know you’re covered for them and you’ll never be stuck.
Note down your spending habits
This bit might not be the most exciting but it will help shed light on where all your money is going outside of your regular expenses. You can either use an account like Monzo that shows you what you’re spending each month, or do it the more traditional fail safe way and create a spreadsheet.
Note down everything you spend from the £3 on a morning coffee, to the £20 on an uber home. You may start to notice patterns of spending, for example do you always buy coffee on a Monday, or buy lunch at the end of the week when you may not have been shopping.
It’s also worth thinking about whether your spending was planned or note. Doing this might be a bit scary when you total up how much you spent on takeaways, nights at the pub, taxis etc. But this is a good way of you knowing where your money is going and then being able to reflect on whether you’re happy to continue spending that much money on things.
Start your month ahead plan
At the start of the month (or just before you get paid) make a plan of your month ahead. Note down how much you get paid and then how much is coming out for your regular expenses and then you’ll know how much disposable money you have for the month. You may also want to factor some money to go into savings.
Then it’s time to look at your. Calendar and think about any plans you may have for the month. Try and assign a monetary value to each activity you may have. For example if you’re going out for dinner with the girls mid-month and you know the train will cost £10 and you generally spend £40 on dinner than your budget for the night is £50.
You can note down weekly money for your grocery shopping, or filling up your car if it’s generally a pretty regular amount. Of course these budgets are only a projection to give you can idea.
Crack own with your plan
The scariest part is actually using your plan but you’ve got to start somewhere. If you’re the kind of person who just puts everything on card and doesn’t think about it then think about withdrawing cash when you’re spending against your budget. You do what works with you.
During the month keep an eye on what you spend and how true your estimations are. You’ll also be able to see the unplanned spending so you can use this to help shape the next month’s budget.
Keep reviewing your budget
It’s always good to review your budget month on month to see if there are any changes to your budget or things you can do to change your habits.
For example you may be one of those lucky people who always has some money left at the end of the month, but then you waste it on clothes you don’t need. If this is the case think about upping your savings at the start of the month slightly so you have less left over to waste.
