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Top Tips For Sticking To A Budget

Top Tips For Sticking To A Budget

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You may want to stick to a strict household budget for a variety of things, whether its to save up for a holiday, work your way out of debt or just to boost your savings.

Sticking to a stick budget is hard when we live in a materialistic world and credit is so readily available. Living within your means is falling out of trend fast, which I think is a real shame.

Living beyond your means can create a snowball effect, the smallest of debts can escalate. It costs money to loan money. Or even if you’re not living beyond your means, you may be in the position where every resource is pushed to the max.

I volunteered at the Citizens Advice Bureau a few years ago, it was a great experience. But I also got to see first hand very normal issues. To my surprise, 9 times out of 10, finance was the centre of the issue.

I must admit, it takes self discipline to stick to your budget. But with all things the more you do it, the easier it gets.

First step before even budgeting is to know your:

  • Income – Including wages and any benefits.
  • Outgoings – In detail, what and when.

That way you know where to assign money.

Top Tips For Sticking To A Budget

Cash Only Method

Obviously some things come straight out of your bank account like your mortgage or rent. But with your remaining amount, withdraw it. When you’re spending with cash all of a sudden the value of cash is enhanced. It’s so easy to pass over a little plastic card, but when you have to use cash from your own pocket, your mentality changes.

The Envelope Method

This is a more structured method of the above and one I love. With this method you need cash and a lot of envelopes. You simply write on the envelope what you want the amount of money inside to be spent on.

Here’s a list below to get you going:

  • Rent (if paid in cash)
  • Electricity
  • Gas
  • Water (if you pay quarterly, divide the amount by 3 and set that aside monthly.)
  • Food
  • Travel/Petrol
  • Eating out
  • Savings

The 50/30/20 Method

This is probably a method a lot of people do without realising, I know I do this naturally. Some money for essentials, some for non essentials and some for savings.

This household budgeting method was devised by Harvard’s bankruptcy expert, Elizabeth Warren. This method is great because it tells you what amounts are suitable for each section.

How it works

Work out your total monthly income and then allocate…

50% – Essentials: such as rent, food, bills & travel.

30% – Non Essentials: such as clothes, holidays & eating out.

20% – Savings: so you can prevent yourself from ever being in debt or getting out of debt. Including larger financial goals such as save up for a deposit or investment.

Three Month Buffer

Work out what you need to live every month and times that by three. Ideally your savings should never be lower than this figure.

In case of any emergencies, accidents or other unforeseen circumstances, you will have enough money to survive for 3 months without an income. So if you lost your job for instance you will have something to live off until you find something new. I think this is really important, since loss of employment can often lead people to become reliant on credit cards on a day to day basis.

Once you have your 3 month buffer, then anything above you can use on non essentials such as holidays.

When I first lived by myself after university this was the method I used. I did do a lot of overtime work initially to build up my buffer amount. But once I was there, it was a nice feeling to know I was never going to be stuck. This is a really simple method to follow and if you have achieved many of your financial goals such as saving for a house deposit then it will work for you.

I hope some of the above household budget methods can help you along with your own financial goals.



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