Balancing your budget
Pretty much the worst thing to have to do is balance a budget. Life, income and expenses have a strange way of not always being on the same page. We get it. That is why we’re helping you with some nifty tips on surviving the dreaded budget imbalance:
- Look At Spending History Knowing how much you spent in the past makes budgeting for the future easier, so calculate all your bank statements and any receipts you can find. Try to remember all the things you don’t have a record of, including the cash you may have spent on impulsive buys.
- Prioritise Cutting down on unnecessary spending is always a good idea. You can do this by dividing your expenditure into things you need and things you want. From here, you can determine what you can cut down on.
- Work Out Annual Income Find out your annual income using payslips and adding on all extra revenue like yearly bonuses, asset payouts and even things like birthday money. It’s a good idea to know your income after tax, in order to calculate and balance your budget properly.
- Track Expenses Separate your costs into 3 categories: fixed expenses, variable expenses and discretionary expenses and add these up for one month. Then multiply the total by 12 to get the annual amount of overheads.
- Calculate Subtract all your expenses from your annual income. A negative total means you’re in debt; if it’s zero, you’re breaking even; and a positive outcome means you have some money to spare. This result should influence your spending habits and determine what needs to change.
- Apply, Observe, Adapt Now that you’ve removed the unneccesary spending, you can recalculate your budget for the year. Divide all your figures by 12 for a monthly total and make this your blueprint for yearly spending. The most important thing is that you stick to it, so check regularly if it’s working for you and adjust when neccesary.