Thursday, December 13, 2012

Budgeting for Dummies: a Beginner’s Guide

Balancing The Account
Balancing The Account (Photo credit: kenteegardin)

If you’ve never had to worry about your own finances before - maybe you’re a student or someone who has lived rent-free with their parents and you’re moving out on your own for the first time - then it can be a daunting prospect and a very grown-up feeling. When once all you had to worry about was the price of a pint, now you’re having to think about whether you can afford to put fuel in the car, do the weekly food shop or go to the cinema.

Budgeting for the month ahead can be a really effective way of getting your personal finances in order, and it really can be quite simple if you allow it to be so - you don’t have to be Carol Vorderman! All you really need is a sheet of paper, a pen and a calculator and you could find that you’re not only making savings, but improving your bank balance as well.

Here are my three top tips for budgeting:

Balance - Outgoings = Available funds. It really is that easy an equation. Take note of your current bank balance at the start of the month. Then, write down all of your outgoings, such as rent, an estimate of how much you’ll spend on fuel and the food shopping, and any other expenses such as credit cards and add them all together. This gives you a total of how much you’ll definitely be spending, leaving you with an amount of money to last you for the week or month ahead depending on how you choose to do it. Then, if you want to, you can divide that figure by days or weeks and that is how much you have free to spend. It really can be that simple.

Online discounts. Shopping on the Internet is becoming increasingly popular with people taking advantage of 24-hour opening, an abundance of stock and online-only discounts which can provide some substantial savings. These can include 20% off at the checkout or even buy-one-get-one-free offers, giving you a lot of money off a product that you would’ve paid full price for on the high street. The money saved can then be saved or used to pay off other bills - a real win-win situation.

Make payments on time. If you've got a bank loan, credit card or payday loan (visit to find out more), then make sure that you make the necessary repayments by the deadlines stated in your agreements or statements to avoid any extra charges being incurred that you haven’t budgeted for. If you make the minimum payments - or pay more if you have the spare cash - on time, then you’ll soon find the amount you owe decreasing, freeing up more cash to really improve the bank balance, allowing you to go out next Friday night for your mate’s birthday.

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