Taking Control of Your Money through Budgeting

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Getting on Top of Your Finances

Planning your finances does not need to be a great labour, and anyone can learn a few simple concepts to help you budget, plan and spend wisely so you can get better control of your money.

Knowing how to run a simple budget is an important part of keeping track of income and expenses, enabling you to get on top of your finances. It can even help you to get ahead, release spare cash and get rid of unnecessary late fees on unpaid bills.

Managing your money can sometimes be a challenge, especially if you do not run a budget to keep track of income and expenses.

I have included here some tips on how to set up your budget which should help you gain back control.

What is a Budget?

  • An estimate of upcoming income and expenses
  • Usually covers a specific period of time
  • Includes a Plan based on the estimates

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How do you Currently Run your Finances?

Some people are good with finances, while others struggle to keep track of everything, sometimes to the point of feeling very overwhelmed with all the bills and debts they have to pay each month.

For many, even the thought of having to budget and keep a record of things can cause panic.

Some live very spontaneously, and simply spend and spend until the money is gone, failing to budget or plan. They do not prioritise, and if they see a new outfit they want, they simply buy it without any consideration for the effect this will have on being able to cover other bills that week.

They find themselves constantly falling behind, facing late charges on bills and dealing with demand letters coming through the post.

It may seem easier to 'close your eyes', spend however you want and hope you manage to come out on top at the end of the week or month, but that method is unlikely to get you past very 'hand to mouth' living with struggles each week to pay everything.

Others try to be more disciplined with their spending, but feel that they are not financially trained enough to know how to run a budget. The very idea of budgeting seems intimidating to them. They may even have tried, but find they do not stick with the budget, and soon give up on it.


Reasons people do not budget:

  • Feel intimidated by money and having to keep track of things
  • Lack of self discipline to write things down
  • Fear of looking at the finances written down, as it may show how much they lack
  • Thinking budgets are only for people who understand money
  • Thinking only people with lots of income need to budget

Is a Budget for Me?

You may think that budgets are only for people with lots of money or large companies.

The truth is, no matter how large or small your income, a budget will help you. Even if you are still young, and only just starting to have your own income, learning to budget now will benefit you in the long run.

Don't wait to get heavily into debt before you start trying to plan your money. If you learn the concepts before you are in a crisis, you may be able to avoid financial challenges other people get themselves into.

Taking some time each month to write down a budget for the month ahead can help you keep track of everything. This does not need to be a complicated process, and can enable you to get on top of debts and financial challenges.

Budgeting Can Help You:

  • Identify 'holes' through which your money is escaping
  • Get on top of 'out of control' spending
  • Keep track of where your money is going
  • Make sure important expenses are covered
  • Helps see how you are currently spending
  • Plan changes in your spending habits
  • Avoid late fees by paying bills on time

You Can Learn to Budget

Overcome the idea that budgeting is for people who understand money and realise you can do it.

Learning how to budget is not as hard as many think; you do not need to be a trained Accountant or have great financial skills to be able to keep track of your money.

By understanding a few simple keys, you can learn to keep track of everything.

If you want to have control of your money, then learning how to run a basic budget is essential.

Let's look now at how to put your budget together.

Poll

Do You currently have a Budget?

  • Yes
  • No, but I plan to start one
  • No and I do not plan to have one either
See results without voting

A Weekly or a Monthly Budget?

Depending on how often you get paid, you may prefer to run a weekly or a monthly budget.

Doing it weekly will mean updating it more often, however will also enable you to monitor more closely your income and spending.

Your budget can also start on any day you choose, not necessarily the first day or the week or month. If you get paid every thursday, then running your budget from thursday to wednesday may make more sense for you, so you plan how you use your weekly income over the next seven days.

If you get paid monthly and the income comes in on the fourth of each month, running the budget from the fourth of the month until the third of the following month may be a better idea.

Plan based upon how your income and expenses are structured.

If you run a weekly budget, you will need to fit the monthly bills into the relevant week of the month.

Make a list of all your Expenses

Weekly Expenses
Amount
Groceries
50.00
Petrol
60.00
Toileteries
30.00
Miscellaneous
30.00
Monthly Expenses
Due Date
Amount
Credit Card
12th
50.00
Store Card
8th
35.00
Phone Bill
20th
50.00
Internet
23rd
30.00
Electricity Bill
27th
75.00
Rent or Mortgage
1st
500.00
Quarterly or Yearly Expenses
Month Due
Amount
Car Insurance
April
500.00
Car Service
December
estimate: 300.00
Christmas
December
estimate: 300.00
Birthdays
February, June, August
estimate: 200.00 each
Holiday
August
estimate: 500.00

Gather your Financial Information

When you initially start a budget, there will be some extra work you need to put in, in order to gather together all your financial information. Once you have done this the first time, it should be relatively simple to update this each time you work on your budget.

Start off by making a list of your income and expenses for the week, month and year.

Write everything in, do not leave things out. It is easier to forget bills if they are not included and this can create surprises later for anything you have not budgeted in. Include Birthdays, Christmas, holidays etc. Some of these may have to be estimates which might need to be adjusted later however at least include them for now.

Notice Key Times of the Month

As you gather your financial information, take note of key times of the month.

Maybe there is a particular week when a large amount of bills are due within days of each other. This often seems to happen toward the end of the month.

Contacting some of the companies and asking if you can permanently change the due date each month is one way to help spread the payments evenly rather than getting hit with a lot at once. Many companies will work with you on this.

If you get paid weekly, then having bills more evenly spread can help you cover them without a major drain on your income each week. Alternatively if you are paid monthly, it might be preferable to have the bills go out close together to stop you spending some money on other things before paying a bill.

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Ask Yourself Some Questions:

As you are making note of your income and expenses, it is a good idea to ask yourself things like:

  • What are the important expenses which must be paid?
  • Which are the lower priorities which can wait?

Highlight these as you go. When fitting them into your budget, make sure the important expenses are covered before the lower priorities. Some lower priorities may be able to be delayed for a week.

Savings

Plan savings into your budget. You may not feel like you have enough coming in to allow for savings, however it is an essential part of a good budget.

Plan to set money aside for large expenses you know are coming up in a couple of months, like a car service.

$10 or $20 put aside each week can add up over time, and be better than getting hit with a large bill for a few hundred dollars.

An Example Budget

Once you have made a list of the weekly, monthly and yearly expenses you are ready to place them into your budget.

Here is an example of a very basic budget, with the income and expenses filled in to give you an idea of what yours will look like once you have filled in the amounts and placed them on the relevant day of the month.

Date
Income
Expense / Bill:
Estimated Total:
Actual Total:
Fri 2 May
Carried over from last month: $30
 
$30
 
Fri 2nd
Pay: $150
 
$180
 
Fri 2nd
 
Groceries: $40
$140
 
Sat 3rd
 
Weekly Petrol: $35
$105
 
Mon 5th
 
Monthly Phone Bill: $45
$60
 
Thurs 8th
 
Store Card: $65
- $5
 
Fri 9th
Pay $150
 
$145
 
Fri 9th
 
Groceries: $40
$105
 
Fri 9th
 
Weekly Petrol: $35
$70
 
Mon 12th
 
Credit Card: $60
$10
 
Fri 16th
Pay $150
 
$160
 

Your budget will of course cover the entire month, the example above only starts the process off to show you how it is laid out.

When you make the budget, you will fill in an estimated total amount of money remaining after that particular expense or income to keep a running total of your cash.

At the end of each week write down what actually happened, and what the actual total money remaining is. This may vary from the budgeted amount as extra expenses may have arisen which you had not thought about to budget. For example running out of bread or milk through the week.

Once you have laid out the week or month in a basic table, you will be able to notice times when you do not have enough money to cover all the bills due around the same time. This could mean your estimated total goes in to the negative.

If this is the case, you will need to make an adjustment in order to get through the week. This may mean slightly lowering your grocery bill that week, or putting a lower priority bill into the following week.

Remember however that bills which are paid late can incur a late fee, meaning next months bill will be higher. Try to avoid late fees if possible.

Conclusion

The information above will enable you to put your budget together. Now it is up to you to keep the process going by updating and reviewing your budget each month.

Further tips to help you gain control of your finances

© 2014 enjoy life

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Comments 14 comments

Inspired Heart profile image

Inspired Heart 2 years ago from Jamaica

Thanks for the tips on budgeting enjoy life. I like the idea of of identifying the holes through which money is escaping. It really makes sense to find them and do something about them where possible.


enjoy life profile image

enjoy life 2 years ago from Europe Author

You are welcome Inspired a Heart. Yes it's so important to close those holes that money slips through so easily, especially if you want to have better control of your finances


erorantes profile image

erorantes 2 years ago from Miami Florida

I like your hub enjoy life. You did a fantastic job . Taking Control Of Your Money Through Budgeting. Thank you for the reminder on how to spend the money. It is great to have a plan for the money. Thank you for your article.


enjoy life profile image

enjoy life 2 years ago from Europe Author

Thank you erorantes, glad you enjoyed it. It's good to be reminded of these things


sam777777 profile image

sam777777 2 years ago from Queens, NY

Wow! You have some great tips. I will start using these. Sometimes it can be difficult for me to budget great number of bills. I will be trying to find more of your tips on budgeting in the future.


enjoy life profile image

enjoy life 2 years ago from Europe Author

I'm glad you enjoyed the budgeting tips sam777777. I will be doing more hubs on financial advice. Having so many bills can feel like it is hard to balance them all, even more reason to write them down and keep a record to help you get on top of everything


Vvitta profile image

Vvitta 2 years ago from Petaling Jaya, Malaysia

i always keep an eye on my household shopping. When items are on sale and can be kept i buy and stock. I buy food that is in season and don't go shopping as a past time. You will be surprised how many folks do just that.


enjoy life profile image

enjoy life 2 years ago from Europe Author

Very true Vvitta, shopping is a popular pass time for people, but can lead to over spending. Sales can be good when you buy items you need and can stock up on, especially food on sale.


Codebreak profile image

Codebreak 2 years ago from Erwin, TN

Awesome!! and Useful Hub!!!


enjoy life profile image

enjoy life 2 years ago from Europe Author

Thank you Codebreak, I'm glad you have found it useful


Suzy Miles profile image

Suzy Miles 2 years ago from Phoenix, Arizona

This is just what I needed to read. I only hope I will be able to stick to a budget. thanks for the informative article


MrJohnReynolds profile image

MrJohnReynolds 2 years ago from USA

Nice hub, very helpful info...


enjoy life profile image

enjoy life 2 years ago from Europe Author

Suzy Miles, I am glad this has helped. I hope you can stick with a good budget


enjoy life profile image

enjoy life 2 years ago from Europe Author

Thank you MrJohnReynolds

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