How to budget?

Nickiwild

Probably a really simple/stupid question.

Basically I want to know how to do a budget for the next month.

I have started by working out how much I should be getting as income throughout the month, and some expenses but then I get paid every 2 weeks, every week and monthly so I don't know what money is for what and I am in such a state


What does everyone else do?

grumbler

Generally budgeting is about spending no more than you earn. However, you really need some amount saved (preferably) or overdraft / credit card to 'smooth' irregularities in payments and spending.

Ideally, say, at the start of the month you have to have the money available for spending during this month.

A credit card paid in full every month is good too if you can get it.

Nickiwild

I don't have a credit card my rating isn't good enough to get one! I will be debt free on the 10th of January as well :-)

I have a real problem cos I get paid on the 1st of every month, and also every tuesday every thursday and every saturday I don't know what money is for what

Hooloovoo

Nickiwild wrote: »

I have a real problem cos I get paid on the 1st of every month, and also every tuesday every thursday and every saturday I don't know what money is for what

As grumbler has said, the only real way to solve this problem is to maintain a "float" in your account to decouple your income from your expenses.

If you make sure you've got enough money in your account this month for all of next months expenses then the whole thing becomes easy to manage and it makes no difference exactly when you get paid or when any bills go out.

PasturesNew

You need to look at annual expenses and put aside enough money each month to cover those when they occur. e.g. I knew that in April each year I had to pay council tax, car insurance, car tax, house insurance, MoT - a total of £1800 just for those. So I knew that each month I had to put £150 into the pot for when April ame around. Of course, starting out from now I'd have had to have started putting in £450/month from now just for those.

So, start by making a list of all bills and the month in which they are due. See how many months it is until the big ones occur. Then you'll know how much you need to start saving from now to cover those and also how much in a year you need, so how much your monthly savings need to be.

e.g. Xmas happens every year, if you know you spend £300, you need to be saving £25/month from now just for that.

Budgetting needs to be done annually, not monthly.

Write down the bills, the months - and then see if you've enough in the pot each month to cover those by using a spreadsheet.

Then chuck in a random £200 emergency into the pot.

You'll need to save more at the start, but once those big months are passed you can then reduce the contribution to the pot until you end up with the right amount going in each month.

worriedindebt

I find having a bills account and a spending account helpful. I work out what I need to put in bills acc each month and leave it there so when I go to ATM I know that what's in the spending acc (or not as is of then the case!) is mine.

worriedindebt

I also think wherever possible pay by direct debit so you don't get unexpected bills. I used to dread quarterly gas bills etc but now I just pay each month

Nickiwild

Does it work out cheaper to pay annually for those bills? I never thought of doing that, but then my Car Insurance is £105 a month anyway! (Just passed my test, under 25, business insurance and a 7 seater!)


I'll sit down tonight and write down things like birthdays, christmas, and holiday and that should give me an idea of what I need to put aside each month to save for those? I have a savings account I can put it in.

At the moment my January income (from Dec 20th til 25th of January) will be £4,400 and my outgoings are only £3,100 but I guarantee that extra £1,000 I won't see any of it as it'll just... dwindle.. Humph...

Going to finally get my head around this before the new year, so desperately want to be more organised financially.

grumbler

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PasturesNew

Nickiwild wrote: »

Does it work out cheaper to pay annually for those bills?

I've lived my life paying every bill up front/in full asap - so that should circumstances change over the year it gives me a buffer as I'm not having to be forking out monthly for those ones and have time to adjust to when they come around when I can take that as an option.

Nickiwild

I'll ring around tomorrow to see when all my things are due up for renewal and try to get lot of savings in place so I can pay all off in one go and then I should be able to keep track of that so to speak.