Updated on 3 June 2015.
Many of us are put off by the idea of finding out how much we spend compared to how much we earn each month. If you find you spend more than you earn, you may have no choice but to overhaul your lifestyle - which can be a daunting task.
However if you want to gain control over your finances it's vital to have a clear idea of what you have going out compared to what you have coming in.
Drawing up a budget is worthwhile for everyone, whether or not you find yourself struggling with money. It will make your money much easier to manage and will ensure you aren't caught out by any unexpected expenses.
Writing a budget will help you to find out whether you spend more than you earn, and also give you an idea as to what you can afford to spend. These two very important factors are the key to getting control over your finances.
The end result should be that you find a clear and simple way to spend less money than you make.
Follow this step-by-step plan to set out a budget that will suit your finances and help you to manage your money.
If after the above calculations you find that what you spend each month is more than what you earn, you are living beyond your means, and will need to cut back on unnecessary spending.
Start by looking at your variable expenses column to see what might be possible to spend less on. For example, you may be able to cut back on how much you spend on grocery shopping per month. You can do this by sticking to a strict shopping list and trying not to succumb to impulse buys.
Figure out what you can live without, but be realistic. If you decide to take drastic measures and deny yourself all entertainment expenditures, you'll find that you won't keep it up for long. Try to set yourself realistic targets that you will be able to keep up rather than abandoning after a week.
You may need to come to terms with the idea that your lifestyle will have to change temporarily while you regain your financial footing. You may have to cut back on some luxuries for a while; but remember that at the end of this period you should feel more in control of your finances.
Drawing up a budget may be hard-going at first, but it's a job worth doing properly for the sake of your financial wellbeing.
Written by Sally at money.co.uk
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