If you are setting up a home, whether renting or buying it, you will need to budget carefully. This is because there will be a lot of extra expenses. Not only will you have all of the household bills to pay, you will also be likely to have other expenses such as furniture, accessories, decorating and things like this. Even if you think that there is nothing to do in a home, you could easily find that there is actually lots of work to be done and things to be bought. It is therefore wise to try to budget hard to make sure that you do not overspend on things and have no money left to pay for what is needed. Therefore, it is wise to set up a budget.
Find a Way to Note it Down
To start with you need to be organised. So, find a way to note down all of the information. Some people might like to use a piece of paper or a book, others might prefer to use a computer; perhaps a spreadsheet. It is best to use something that you are familiar with and have easy access to so that you do not waste time learning something new or hunting for something. It is easy to procrastinate doing this sort of thing – try not to!
Add up What you Have Coming in
To start with it is good to do something positive. This means that you should look at all the money that you have coming in. This includes money form salary as well as any benefits you get and any interest or return on investments. If you get regular gifts or money from friends or family you could ass this in as well if you are certain that you will get it.
Add up What you Need to Spend
It is important to make sure that you soon move onto this step. This might be seen as the scary one, but it does not have to be. Note down everything that you have to pay for. Now this is not everything you buy, but just the things that you need to buy. So, this would be rent or mortgage, council tax, utilities, contracts, loan repayments on short term loans like those offered by Cobra, insurance, food, transport to work, maintenance and things like this. It will include anything that you need to pay for which you have to have or you are contractually obliged to pay for.
Calculate What is Left
You are now in a position to work out what is left once you take away all of the payments that you will need to make. Hopefully there will be something left but it may be the case that you do not have enough money. Either way, you need to work this out so that you can move forward with what you need to do next. If there is not enough money then you will need to work out whether you can cut down anywhere, if you are paying too much for things and you can switch to cheaper providers or whether you can earn more money. It is really important to come up with a solution that you are confident will work and provide you with the money you need. If you have some left, then you will need to make sure that this is the only money you spend on extras, or else you could end up getting into trouble because you spend too much and do not leave enough to pay for essentials. You will need to be strict on yourself and be prepared to be flexible in case you get unexpected bills or costs of things go up.