Ugh, budgeting. The very word conjures up images of staying in every night with a plate of baked beans, a cold cup of tea and a dog-eared library book for company.
But that couldn’t be further from the truth.
Doing a budget is actually your first step towards being rich and fabulous. Really. Once you know (or even just have a ballpark figure for) how much money is coming in each month and how much has to go out, then you’re starting to control your cash rather than itpushing you around.
Not only that, but knowing how much you have left over each month to spend on you, rather than on bills, means you can buy things with a clear conscience. Also, you can start putting a bit away each month to build your future wealth pot.
There, that puts money in its place!
So, let’s get started.
Step 1: Go online and put ‘budget planner’ into your search bar. You’ll see there are loads of them in the list. Pick one you like the look of and fill in the sections, using your recent bills (gas, electricity, rent, mobile phone etc) to come up with average monthly figures. These online planners are really handy because they remind you of the things you spend on that you might have forgotten about like your TV licence or travel insurance. Also most of them will take your one-off, annual payments and divide them into twelve so that you can work out better what your real monthly spend is.
Step 2: While you’re doing this, you might wonder if you could get some of your monthly payments down a bit. Yes, you probably could. As you’ve got your bills out this is a good time to go onto one or two of the comparison sites and see if you can get cheaper rates for things like your gas and electricity, your broadband and your insurances. If you haven’t switched for a while you could save yourself at least £500 a year doing this. Once you’ve switched, put the new, lower amounts into the calculator.
Step 3: Put in how much money you get each month, after tax and other deductions. If you’re freelance like me and your money changes each month, find out how much you earned for the whole of last year and divide it by twelve to get your average monthly income.
Step 4: Take away your outgoings from your incomings (or get the planner to do it for you) and whatever is left over is the money you have to play with each month. Nice.
Step 5: Set up some ‘savings pots’ for yourself. Now that you know how much you have to spend on yourself each month, you can work out what you could afford to put away for important things like a holiday, Christmas and, most important of all, a ‘savings safety net’ or money for a rainy day. Set up standing orders to go out at the beginning of the month from your current account into savings accounts for things like that. Don’t wait until the end of the month as you won’t have anything left then. Nobody does!
Now you really are the ‘Monarch of Money’. You are sitting on your regal throne on top of your situation and you are in charge. Tell your money where to go because from now on you’re calling the shots!
Jasmine is a TV presenter and money expert who is regularly featured on BBC TV, Channel 5, Sky News, Channel 4 and ITV. She is an all-round money expert who can speak on all aspects of personal finance and has been dubbed ‘the kind money expert’ as she approaches questions with understanding, equality and, when appropriate, humour. Jasmine set up the consumer website MoneyMagpie.com in 2008 and produces information every day on how to make and save money. MoneyMagpie now has over 70K subscribers to its weekly newsletter.