With everything going on around us with the current COVID-19 situation, it really is important to create a budget to manage your finances. In this blog post, I want to help you gain understanding on how you can plan for your future and save during difficult times.
Understanding your finances is critical to planning your future and keeping your head above water in difficult times. Despite this, many people remain in the dark about their own financial standing. Although it may seem daunting to explore your finances in detail, creating a workable budget will give you the tools and the confidence you need to plan for your financial future. To get started, take a look at these top tips for creating a budget that works for you…
It is actually really easy to minimize our own expenditure and artificially inflate our income, even when we don’t mean too. Perhaps you base your monthly income on your pre-tax salary rather than your net income? Maybe you forget to include the regular after-work drinks or monthly subscription to streaming services when you’re tallying up your outgoings?
To really work, your budget needs to consist of accurate information. Gather together copies of your bank statements and really itemize where your money’s coming from and where it’s going. Once you’ve done this, you’ll have the key information you need to create a personal budget.
Explore financial products
Most people are in some form of debt, whether it’s a mortgage, student loan or a credit card. Taking out additional financial products may seem unwise when you’re already paying off a large amount of debt, but it could be a viable way forward.
With personal loans to consolidate existing debt, for example, you could reduce your monthly outgoings without harming your credit rating. To consolidate your debt, you’ll need to pay off some loans early, so do check that you won’t be charged extra for doing this. If in doubt, seek independent advice before making major financial decisions.
Check your contracts
If you want to make some savings, it’s going to be necessary to cut costs somewhere. However, long-term contracts may mean that you’re tied in to paying for some services for the foreseeable future. Whether it’s a gym membership, phone agreement or streaming subscription, don’t be tied down longer than you need to be.
Check your contract terms and make a note of them, so you can review your usage before it’s time to renew. If you aren’t getting value from the product or service, be prepared to let it go. If you have a long time remaining on the contract, talk to the relevant company about canceling. You may find that paying a cancellation fee will work out cheaper than maintaining your subscription for months to come.
Make budgeting fun
Cutting your outgoings and making savings doesn’t have to be boring or too difficult. By viewing the process as a challenge, you can use fun and innovative ways to help you hit your goals. Although it’s great to have high targets, it’s important to be realistic too. By setting yourself small objectives along the way and rewarding yourself as you achieve them, you’ll stay motivated and be more likely to use your personal budget to shape your future finances.