Budgeting
Creating a budget can be frustrating and staying on budget can be difficult, but careful budgeting will improve your financial situation.
How do you get started?
Until you know where your money goes, you cannot create a spending plan.
You can start a budget by simply writing down what you spend.
Your budget is your personal tool and you can choose how much detail you want to include.
Think about what categories you would like to use.
Some people find it helpful to work with two groups of expenses:
Essentials – (variable) Costs that occur regularly but may vary in amount
Extras – (discretionary) costs that are determined by personal wants that may be controlled.
There are no hard and fast rules for creating a budget. What is important is that it is easy for you to understand. Remember to keep the list of categories simple and useful to you. And be flexible. You can change the categories you use if you find they don't work for you.
Try our Budget Planner to help you keep track of your expenses.
How to use
Choose a time period (e.g. fortnightly or monthly). Type in your regular income and expenses. Remember to use the same time period for income and expenses.
Enter figures into the white boxes and the planner automatically calculates totals and sub totals. You can also change the income and expense items and add new ones.
Analyze Your Spending
Emotional spending occurs when you buy something you don't need and, in some cases, don't even really want, as a result of feeling stressed out, bored, under-appreciated, incompetent, unhappy, or any number of other emotions. In fact, we even spend emotionally when we're happy.
Examine your budget, can you find any expenses that you can avoid?
What is more important to you? In Bermuda a pedicure every other week can cost you approximately $1,700.00 a year and eating lunch in a nice restaurant twice a week is approximately $1,500.00 per year.
One might argue that these luxuries, along with facials, manicures, golfing, happy hour etc. contribute to our piece of mind and improve our mental health.
One could also argue that an extra $3,200.00 per year comes in very handy. Do the math and decide what you are willing to sacrifice to reach your financial goal.
Keep Your Receipts
Once the budget is set it can be tempting to stop counting every penny and keeping up with every expense.
But if you really want to realise exactly how much you are spending and you want to stick to your budget you should save your receipts.
Save your receipts, and write down every penny you spend and where – don’t forget bank charges.
Keep an accurate account of how much money has actually gone through your hands.
Using a note book to record every penny you spend, every day, is useful.
Share the Responsibility
Every member of the household should participate in the budgeting process, including children.
This is a good opportunity to lead by example and teach your children responsible money management.
Sit down together to explain the goal and determine how much spending money each member of the household should have.
Then, every week see how well you're doing. If everyone shares the responsibility it will be easier to save money and realise your goal together.
Use Cash
- Carry enough cash to last one week at a time.
- When you only have cash available you are more likely to question whether the item you are about to purchase is a need or a want.
- Determine how much you will need each week for necessities.
- Put the credit and debit cards away.