Better budgeting: the beginner's guide

Chris Smith

November 24, 2014

November 13, 2018

Better budgeting: the beginner's guide

We all have the best intentions when it comes to managing our money, but often it's hard to know where to start, and even harder to make a budget you can stick to in the long run. At Money Dashboard we want to help you take control of your finances, so we've created a step-by-step guide to budgeting better. It doesn't have to involve lots of spreadsheets or penny pinching – you just need a few simple ground rules.

1. Check the facts

Being realistic about your finances is the key to coming up with a budget that works. Luckily, with Money Dashboard there's no need to dig out crumpled receipts from your pockets. Our free budgeting software gives you a hassle-free way to track your income and spending with easy-to-follow charts and automatic tagging, so you know exactly how much money is going where.

Start by checking out your total monthly income, and whether you spend over or under it. Then use Money Dashboard to see what proportion is going on things like travel, groceries, eating out or debt repayments. This will help you get an accurate idea of your spending habits.

2. Set a goal

Whether it's saving for your dream holiday or simply making sure you don't stray into that overdraft, every budget should have an achievable goal. Once you know how much you have to spend and what your major expenses are (think rent and bills), you're in a great position to set a realistic target, with an emphasis on the 'realistic'.

This could be a monthly amount you'd like to put away for a rainy day, or it could be living within your means until payday. Starting small will make it easier to adapt your spending habits to a target-driven approach, so you'll be working up to bigger goals in no time.

3. Create your budget

Armed with knowledge of your spending habits and your new goal, you can start putting together a basic budget. First, tot up your total income for the specific period you're budgeting for. For example, if you know you're getting a 10% bonus in December, factor this in. Then deduct the money you know is coming out: bills, housing costs, and so on.

Next, check your records to see how much you usually spend on groceries. You can use our software to find this information and put it into a calendar, so you'll be able to see how much disposable income you'll have left after these expenses. Then you just need to divide this between what you want to spend and what you want to save.

4. Make an action plan

To make sure you can achieve your goal, work out where you can cut costs and turn that into an action plan. Is that morning takeaway coffee adding up to more than you thought? Could you cut your energy bill by switching provider? Or is it time to move to a better value supermarket for the weekly food shop?

Finally, plug your new savings into your budget – you might be surprised at how much they could help you save. Once you've got your budget set up, your goals firmly in sight and your action plan ready to go, it'll be far easier to streamline your spending and build up those savings.

 

Posted by Money Dashboard

  

Chris Smith

Money Dashboard

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