When you spend all day looking after other people's finances, it can be easier than you might think to overlook your own. Even when everyone around you assumes you're the expert in all matters concerning money and debt, life can sometimes present you with unforeseen or unavoidable events.
Benefits of budgeting
Budgeting is arguably the easiest and most effective way to manage your finances. And while it may take some effort, the benefits are numerous.
It can give you control over your spending, which is useful whatever your income. You'll be able to see clearly how much money you have coming in, how much is going out, how quickly you're spending it and if there are any shortfalls. You'll be able to identify where you can make cut backs if you need to, or if you need to find an alternate source of income or support.
Budgeting can allow you to put some money aside for those things in life that happen unexpectedly too. It may also save you money in overdraft charges and other penalties such as late payment fees. And as your finances become more controllable, another thing you'll benefit from is peace of mind, which means less stress.
How to create a budget plan
Drawing up a personal budget plan helps you review your income and expenses. Start by making a list of all your incomings and outgoings. Here are some pointers to help you get started.
- Make a list of all the money you have coming in, including your salary, any benefits you may be claiming, contributions from other members of your household and any other income
- For your outgoings, list all the essential things you have to pay such as rent/mortgage, utilities, telephone/broadband, financial products (insurance), personal pension, travel costs, childcare, hire purchase/conditional sale payments, court fines, child support/maintenance and other things like food, clothing and basic household items
- Also include any miscellaneous costs such as paying to see your dentist or optician, private health insurance, paying for repairs around the house, subscriptions to professional associations (including trade union subs), getting your hair cut, and even things like newspapers and magazines. Try to work out an average cost for the amount you spend on as many of these things you can think of each month
- If you're paying off any debts, list any priority and non-priority debts that you have, including any payments you're already making towards them
If you're an ACA student or ICAEW member and are experiencing financial difficulty and would like to speak to a member of CABA's support team, contact us today.