As spending and splurging over the Christmas and New Year period is officially in the rear-view mirror, Anthony Bell gives us the top tips for preparing and sticking to a household budget that applies to both single and family households.
By Anthony Bell www.bellpartners.com
When considering your household budget, the principles that you follow as a single person or as a family are somewhat the same. What is different is the type of expenses that each household may have.
It is great if your household has a budget. However, not only is it important to have one it is even more important to actually follow it.
The success of a budget really comes down initially to your preparation of it. If you set a budget that is unrealistic, you will be doomed for failure from the beginning and will come to the conclusion that budgets are just not for you or your household.
When you start to prepare your budget the first step will be to work out where you are spending your money:
– Write down everything that you spend your money on.
– Once you work our where your money is going you can look at ways and areas that you could afford to reduce.
– You may also find that you are spending a lot of your money on certain aspects of your life and it may be worthwhile to shop around for a better deal.
– This could include asking the bank for a better interest rate discount or even looking at another bank to take your loan to. Can you get discount on your insurances, phone & internet connections along with your gas and electricity? It pays, in the form of greater savings, to do your homework and see what other offers are out there.
Once you have worked out where you spend your money, try and work out why you end up not being able to stick to your budget:
– If the budget is not realistic at the outset then change this. You may either have to allocate more money to certain expenses or if you don’t have enough money to pay for everything, it is making the tough but correct call to permanently reduce your spending on some aspects of your life.
– In other instances you may have allocated appropriate amounts to your expenses but then sometimes, temptation gets the better of you. In these circumstances before you know it your credit card is maxed out, yet again.
– If you cannot curb your spending habits or you just simply get caught up in the moment, it may be time to cut up the card until you are better with managing your cash. This way you cannot buy items unless you physically have the money in your bank account in the first instance.
– If however, cutting up your card is not an option for you then another alternative is to get your limit reduced to a much more manageable level and only use it accordingly.
Following a budget can be difficult, however the rewards of following a correct budget result in less financial stress and more freedom in the future.
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