How to create the perfect budget for you



Perhaps you are saving for a big event such as buying a house or planning a wedding, or maybe you simply want to get on top of your spending. Sadly, budgeting isn’t taught in most schools, and is a skill that a lot of us struggle with. However, just because you find it hard doesn’t mean it’s impossible, and here are some tips on how to make your budget work for you.

Start with what has to come out

We all have those bills that are non-negotiable, such as rent and utilities. Some of them, like rent or mortgage payments, are likely to be pretty fixed, but it’s always worth having a look at things such as electricity and water to see if you can find a cheaper deal elsewhere. Either way, make a list of these essential outgoings and how much of your salary they will cost.

How to create the perfect budget for you

Do you need all of those subscriptions?

We are all guilty of signing up to things that we feel we need and then forgetting to ever cancel them. When was the last time you went to the gym? Do you need to pay for cable if you only ever watch Netflix? Are you still reading that magazine that you get delivered? Don’t cut everything out, but get rid of anything you no longer need and then add the rest to your other calculation.

Income – outgoings

This is pretty simple but something that so many of us fail to do regularly – calculate how much you spend on food, gas, etc., and work out how much, with the other bills and payments we looked at earlier, you have at the end. This is your money to save, invest, or spend!

Set your goals

This is where you need to think about what you want in the short and long term. Are you saving for something specific, or do you just want to be able to put money away for a rainy day? What is important to you? Are you someone who likes to buy designer clothes, or do you like to spend money on experiences? Your budget has to be personal to you, as we all have different things we care about or want from life. Use this to set yourself a budget. How much are you going to set aside for different things? Rather than just playing it blind all month and then running out of money before payday, spread out your costs and give yourself a weekly budget to play with.

50-30-20

If you want to follow a more strict budgeting method, the 50-30-20 plan suggests that you should put 50% of your income towards your needs, and 30% towards things you want, with 20% going into savings. This is a really great way to divide up your money, however it only works if your ‘need’ category comes to under 50% of your wages, and we know that it’s not always the case.

How to create the perfect budget for you

Things are always changing in life, so it’s essential that your budget develops and grows with you. Perhaps after a few months, you realize you haven’t set aside enough for food, or you have a decent surplus that could go into savings. If something doesn’t work, change it and try again – there is no shame in doing this, and it’s much better than struggling to keep to a budget that looks good on paper but doesn’t work in your real life.