The best approach to budgeting correctly is to work towards simplifying the process. Many people do the opposite by over complicating the issue of managing their finances, Wonga has put together a nifty little budget spreadsheet to minimise the fuss, and streamline the process for you.
Implementing a budget system is the first step in taking control of your money. When you record your expenses and weigh it against the money coming in every month, you begin to get an eagle’s eye view of your finances. A simple overview like this helps you to understand when to hold back on dishing out your hard earned cash. You will appreciate the fact that it’s best to stay away from those things you realistically cannot afford.
You also naturally develop the insight to want to put more away on a monthly basis. It makes more sense to save up money for the valuables you do require rather than burdening yourself with credit unnecessarily. Only when you budget can you see where your money is going and this helps you to make positive change possible.
By budgeting, you also identify which expenses do the most damage to your bottom line. You will decide for yourself that certain expenses can and should be eliminated altogether. Retail accounts and credit cards are the obvious culprits since they usually constitute a monthly expense you know you can do without.
There are always more important commitments to consider like rent and paying off your car or house. Other expenses which you usually pay attention to like petrol costs and running your cell phone are unavoidable. But since these fluctuate there’s always hope to control them better when you record them into your budget.
Following a budget plan even if your income stays at the same level still gives you a plan which helps you get more out of your money. It will make you more conscious of how money affects your lifestyle and thereby help you cut on overspending. And once you’ve reduced on overspending, you suddenly have more money to play with every month.
Now what should you do with more money back in your pocket? You’ve guessed it – Save!