Taking Control of Your Personal Finances
In order to control your debt you need to have a good understanding of your personal finances as a whole, however many people don’t do a regular personal budget, whether it’s a weekly budget or a monthly one. In fact, many people do not know what a personal budget is.
So what is a personal budget?
A personal budget, in its most simple form, is a record of your incoming and outgoing finances detailed in one place allowing you to see what is left after all the bills and regular expenditure is taken out. It can be done on paper, or more commonly nowadays, on a computer spreadsheet such as Microsoft Excel or Open Office Documents.
Why should you create a personal budget?
As mentioned above, to control debt you firstly need to have a good understanding of where the money is going each week or month. On many occasions it can be a huge revelation where much of your money is being spent, which in turn allows you to understand where potential savings can be made.
A personal budget also allows you to forecast for holidays and special occasions when additional funds may be required. This gives you two options; the first can be to plan ahead and save the required amount prior to needing it. The second gives you time to research the loan markets and choose an affordable personal loan option that suits your needs and your budget.
So how do you create a personal budget?
Be honest with yourself. This budget is for you and no-one else, so you have no need to make things look better than it really is.
You firstly make a simple list of all the regular expenditure you have on a monthly or weekly basis. Remember to include:
- Utility Bills
- Council Tax
- Phone/TV (include TV License)
- Mortgage or Rent
- Petrol or commuting costs
- Vehicle running costs (tax, mot, servicing)
- Kid’s day care or schooling costs
- Pensions or regular savings
- Personal loans
- Leisure expenditure (cinema, restaurants, cigarettes, alcohol)
Once you have gathered all of your outgoing expenditure, which can easily be found by sitting down with your recent bank or building society statements and listing it all out, you can then add it all up at the bottom of the column or list.
You then need to add your weekly or monthly income to the spreadsheet or list, and subtract the outgoings total from the income, leaving you with the remaining amount.
To save you from manually doing this every month, you can copy the amounts from the first list/column in to a second list/column, making any adjustments as you realise them, such as a larger amount on groceries next month or a lower phone bill.
There are many websites that have budget calculators that can help you create your list such as:
Once you have completed your personal budget you will be at the point where you will fully understand where your finances are being allocated and where possible savings could be made to make your money go further.
This is also the point at which you can understand if you may need additional help to reach certain financial goals or requirements, like having to replace the family car or urgent home improvements.
Forewarned is forearmed as they say.
For other useful personal finance information have a look through the rest of the George Banco†blog.
For information on a personal loan or guarantor loan then please get in touch with one of the team on 01225 941941.