Figuring out how to live a little more frugally? Many of us are. And the best place to start is with a budget checklist — a proven path to living within your means, and saving money.
People’s goals when budgeting can differ widely. For some people, it’s about reducing debt. For others, it’s about approaching retirement, and wondering how far a pension will stretch. Or it might be saving up for a house deposit, wedding, or faraway holiday.
Either way, a budget checklist gets you off on the right foot, saving money, and avoiding mis-steps.
Know how much you’re spending, and on what
Chances are, you’re spending money in lots of different ways — cash, credit cards, debit cards, direct debits, standing orders and so on. Capturing this information can be messy: banks statements and credit cards statements are one thing, cash another. Keep receipts, and log expenses when you can’t get a receipt.
Add it up, under sensible headings
Most of us have access to spreadsheets — there are downloadable templates on the Internet, or you can build your own. The key thing is the headings: food, mortgage/ rent, subscriptions, travel, council tax, going out, entertainment and so on. Your headings might differ, but those are the basics.
Know your income
For some people, this isn’t a complicated part of a budget checklist: they get one salary a month, and that’s that. Others will have more complex affairs: multiple jobs, commission payments, and government payments such as the state pension or childcare allowance.
For some, it will be a fixed amount each money, for others it will vary — if so, use an average.
Set an expenditure goal as part of your budget checklist
Remember, this is why you’re working through a budget checklist in the first place! So whether you’re saving for a house deposit or reducing debt, set a target expenditure level that will put you on course to meet that goal.
Plan your expenditure so as to hit your goal
Chances are, logging your actual expenditure flagged up some easy things to cut out. Too many takeaway meals, subscriptions you don’t use, unnecessary taxi rides and so on. What they add up to can be a shock!
Other expenditure reductions will be more difficult, involving hard choices. What do you cut out from your entertainment expenditure, for instance? Don’t forget, too, that it’s not just about cutting things out—substituting cheaper items or activities things can be a powerful money-saving tool as well: borrowing books from the library, for instance, rather than buying them.
Track your actual expenditure
It’s easy to get complacent and take your foot off the pedal. Don’t find yourself working through your budget checklist again, in a few weeks’ time!
Use your spreadsheet to track your actual expenditure, and compare it with your planned expenditure. Not only does this help avoid nasty surprises, it can also throw up additional savings opportunities.
Periodically revisit the budget checklist process
While you don’t want to revisit a budget checklist because you’ve taken your foot off the pedal, it’s an excellent idea to revisit it periodically — say, once a year.
As you get better at living more frugally, taking a fresh look every so often can lead to opportunities to spot further money-saving ideas that you might have overlooked.
Goals can change, too: initially, you might have wanted to get out of debt, but subsequently you might want to re-plan things so you can save for a house deposit.
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