You've not started with the end in mind. Why are you setting up a budget? To have better overall control? To pay off or not get into debt? To save up for something fabulous? To align your current season of life to your reality?
You've restricted yourself too tightly. I don't know about you but the mere mention of the word diet and I crave chocolate! Denying yourself is no fun, you have to enjoy life. Do you need to extend the timeline for your end game so that you have some breathing space?
You've not created 12 months visibility to your budget. Businesses will look ahead to see potential bumps in the road as well as when they can make investments & big purchasing decisions. It's no different with your home finances. A bigger picture view of your income & your outgoings will include seasonal expenses such as Christmas & holidays as well as seasonal income with bonuses or business dividends. Everything ebbs & flows you can't live one month to the next & expect your budget to work seamlessly.
Considering 2022 especially as The Year of The Squeeze! It is going to be tight for so many of us, the prices have gone crazy for essentials, national insurance contributions are increasing, interest rates are rising & so taking a fresh perspective at managing your household finances is a sure fire way to be as comfortable as you can be.
You haven't got an emergency pot of money. You have some cash savings and feel great about it but then something comes along & wipes it out unexpectedly. What is your tipping point where if something needs repairing or replacing, the cost of it makes you wince? Is it £500, a £1000...? Save for that much and leave it there for those emergency times.
You haven't got a yearly savings fund so those seasonal times mentioned above hurt you every year. You end up deep in your overdraft and playing catch up for months afterwards. If this is you, consider a "sinking fund" or annual expenses pot so you build enough money in advance. This means Christmas & car servicing for example are paid for out of this savings account, leaving each month running more consistently.
You get confused mid month what you have left to spend. Easily done if you're only using one account. Create at least 3. One for the main income in and expenses out. What's left over is split according to your budget between your savings account and whats left to spend for the month account. You only use this account for spending and you can see 24 hours of the day how much is in there including pending card payments. Or you could use only cash and that is a real eye opener!
Do you have a dim view of money or how you are with it? Money mindset tweaks can make a huge difference. What did your family teach you about money? Getting into the pain points of how you feel & act around money isn't easy, if you sign up for my free mini money journey it might help you gain a fresh perspective, see below for more info.
You're not on the same page as a couple. What does your partner think about money & does it jar with your opinion? This is such a tricky area and one to explore more deeply another time, but how much does the money subject affect your relationship? Do you trust each other (whoah, I know a biggie) If one of you has one end in mind and the other doesn't, then guess what? If you're not on the same page, can it be ok that you're not? Can you create totally different budgets so that you're contributing as you agreed and then doing your thing with what you have left?
You're making it too complicated! If you're using a pad and a pen & it works for you thats great. If you create your own spreadsheet, fantastic. If you want one that's all done for you (except the actual inputting of your info) then have one of my designs. Make it easy for yourself. Budgeting is simply knowing your income, minus your expenses = what's left to spend. Choosing with purpose how you spend it, is the fun part.
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