Tips for creating a budget and sticking to it

There are several ways to create a good budget. Creating the budget doesn’t have to take long with these simple tips.

1. Calculate all your “committed costs”. These are things that you must pay for in order to live, like your mortgage, loan repayments, utility bills such as electricity and most other monthly bills that are fixed every month.

2. Next estimate all your “necessary costs”, such as food bills, how much you spend getting to work etc.  Once you have worked this out, what you are left with is your disposable income.  This is the income you have left to pay for things that you could do without like clothes, leisure time or a coffee at Starbucks.

3. Then list all the monthly “consumable costs” you want to pay for on a monthly basis like a shopping trip to buy birthday gifts, or a hobby.  This can change month by month depending on what you have to pay for or you can budget every month a certain amount to pay for things such as clothes and shoes or a holiday at the end of the year.

Another few tips to consider when creating a budget:

1. Don’t plan to spend all your money every month because this will mean you won’t be prepared for unexpected costs, such as emergency expenses.

2. Try to save every month to prepare for a sudden change in your circumstances and also to prepare as early as possible for you retirement.  The earlier you start, the more you can save.

3. Try to be disciplined and stick to your budget.  A budget will only work if you have strong will to stick to it.  If you stray from your budget then your money will start disappearing from your bank account.

4. Finally, monitor your monthly costs and try to see where you can save money by cutting out things you no longer need or want.

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