5 Clear steps to follow when planning for
The Year of the Squeeze.
I've been budgeting all my life and planning out my year ever since I learned how to read & analyse a business profit & loss report (P&L).
It's stopped me getting into debt, into a spiral of stress & enabled me to live a lovely lifestyle because I spent with purpose.
I did occasionally say "oh sod it I'm having it" but it was still consciously done and that's the whole point.
I started this business to help other people learn to love, or at least, tolerate managing their home finances. It can be boring, it can be overwhelming and it can feel difficult to do if you're not that great with numbers.
Don't worry, neither am I which is why I've always been so intensely focused on getting it right.
Yesterday, Friday 4th Feb, I was asked to chat to Erika North on BBC Radio Kent about budgeting especially in this climate. The link to have a listen to the 8 minute segment is here:
Step 1 - What do you want?
Seriously what do you want to do, be, have this year? Or the next 3 years?
Are you and your partner on the same page? Are you in agreement with what is important as a couple and as individuals and are you heading towards those things?
Or have you not even spoken about what you want?
I know, this can be a stinger when you realise you might be pulling in separate directions.
Does it all seem too overwhelming or unlikely you'll ever get what you want?
Are you just going with the flow and letting life carry you along?
This 8 week mini money journey will help you get started with what can be a life shifting decision. Its a free weekly email with bite sized guides, exercises and thought provoking information that can help you get your head on straight.
Step 2 - Align your head, your heart & your money to face the same direction
Why?
Because when you get in the car to go somewhere you point your car in the right direction and drive. You might have diversions, road blocks, traffic & delays, but you get there.
"How we spend our days is of course, is how we spend our lives." – Annie Dillard, The Writing Life
Maybe then how we spend our money is how we spend our lives?
Step 3 - Your whole year ahead is yours for planning
When I ran my budget month to month I came up against problems. Some months are damn expensive compared to others.
I started worrying about paying for my holiday, worrying about how to afford Christmas.
So I planned my year - month by month with my expected income & expected outgoings.
I started saving every month so that the expensive months became less so and each month was more consistent.
When I got a bonus I spent some & saved some so when something needed an expensive repair I didn't dip into my lovely savings, the savings for my holiday, I had a savings pot for the boring things. An emergency fund if you will.
Being sensible isn't always fun but when someone stole the catalytic converter from under my car one night, as I dragged the exhaust up the road 200 meters before I realised, my tears were purely of frustration & anger at the arsehole who had done it - not because I couldn't afford the excess on my insurance.
Step 4 - Teach your kids about budgeting and what this year is going to look like
Budgeting isn't taught in schools and had it been for me, an applicable life skill within one of my maths classes as opposed to being told to just learn the seemingly irrelevant concept, I might have got a good score for once instead of my usual 4/10.
Once you've decided what your year is going to look like, especially if it means less goodies than normal, share this with your kids.
Teach them leverage - if they get pocket money for household jobs (not "chores" as these already sound boring as hell) they get to learn how to save up. If they want something they have to learn how to get it or create teamwork with a sibling (highly unlikely but you never know)
If this year is going to look leaner for you then tell them.
No asking 20 times around Tesco's for things they can't have - or they get to use their own money?
Step 5 - Become knowledgeable about the 7 key changes & how they are going to impact you.
The cost of energy. Look out for another blog on the recent changes including what the unit rates are & how it all works but I'm sure you already know that an average use household will be paying around £1900 a year compared to around half that 2 years ago. Your supplier will get in touch to tell you what impact it's going to have on you based on your personal usage. Please book in with me to have a chat as helping people save money on their bills is what I do! It's a free service & I'm very nice & very normal! Link at the bottom.
National Insurance contributions increasing so will have an impact on your take home pay. It was 12% & is now 13.25% of your gross earnings - before tax or pension deductions above an earnings threshold. For example: a £30,000 gross salary. The 2021 / 2022 class 1 threshold is £9568 meaning you earn this without paying any NI. So between £9569 and £30000 is £20,431. This is the figure you work out your NI contributions. 12% of £20,431 is £2451 and 13.25% is £2707. Therefore £256 more a year. This is about £21 more a month. https://www.gov.uk/national-insurance/how-much-you-pay
Variable mortgage deals increasing in line with interest rates so you're likely to be paying another £12 a month for every £100,000 in your loan. So a £200k mortgage is an extra £24 or so each month. https://www.bbc.co.uk/news/business-57764601
Council tax rebates of £150 for those in banding A-D
National Living Wage increasing to £9.50 an hour
Cost of Food increasing - meal planning need not be a big hairdo try this: https://www.budgetingandplanning.co.uk/food
Cost of commuting and petrol / diesel now around £1.50 a litre how will that affect your budget?
So, factor in the above & refresh your budget as soon as possible so that you are in control & feel settled with what lies ahead.
Need some tools to get you started this weekend?
With love from
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