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Creating A Personal Financial Budget - Become Your Own Money Expert

If you frequently notice that you have too much month left at the end of your money then it's probably time to start thinking about devising your very own personal financial budget. Being forced to look at your monthly in-comings and outgoings can seem daunting but it's worth the effort because ultimately, it could save you money and prevent you from going overdrawn at the bank. If you have been living off your overdraft for months or even years then there's no time to lose.

Become a List Maker:

Your first task is to write down every single penny that you spend in a notebook which you should carry around with you everywhere. If you buy a newspaper, magazine, cup of coffee or put petrol into your car, then you need to record these purchases. At the end of the week you may be surprised at how much money you have spent on unnecessary items. These lists are an essential way to begin a budgeting plan because they familiarize you with your spending habits.

Gather All of your Financial Statements:

Collect all of your bank statements, receipts and bills and sort through them individually. On a sheet of paper, make three columns and label them as Essentials, Optional Spending and Miscellaneous. Under Essentials you will have things like utility bills, mobile phone tariff, groceries, water rates, council tax, mortgage or rent etc. For Optional Spending you should record things such as money for socializing like trips to the cinema, buying cups of coffee, sandwiches, gym membership and TV packages. The miscellaneous column is very important because this is where you will record irregular, unexpected outgoings such as dental bills, car repairs or gifts.

Generally you should always remember to allow between £30 and £50 for miscellaneous expenditure. If your car breaks down, it's good to have that peace of mind that you have some money put away for these types of emergencies. Once you have added all of your columns up and compared them to the amount on your payslip you will soon notice whether you are spending more than you earn. If however, you have money remaining then you're already on the right track.

Break Habits by Making Sacrifices:

If the writing is on the wall and your figures show that you are in financial dire straits then you need to try and dispose of some of the things listed in your Optional Spending Column. Ask yourself if you really need to buy your lunch every day. The answer will probably be no because you know that it's far cheaper to take your own sandwich into work. You can still buy lunch occasionally but it's best to wait until you have sorted out your personal finance first.

If you are paying a lot of money for a Sky or Cable TV package but you only watch a few of the channels, then you could downgrade to a cheaper bundle. This could save you up to around £30 per month. If you haven't been to the gym for months then cancel your membership and go cycling or running instead as these are free ways of staying fit and healthy. Look at the amount of money that you're spending on internet access and do some research to see if there are any cheaper deals available.

If you usually spend a lot in the supermarket then there are many ways to save money here. Swap your usual brands for the budget equivalent as there's not that much difference and you could actually halve your grocery bill. If you normally waste money on bottles water, stop buying it and get a water filter instead or even better still, drink tap water.

Know Your Weaknesses:

If you are fully aware that you can't help spending money on certain things then you should avoid these things. For example, if you get regular emails informing you of special offers that you would usually take advantage off, un-subscribe from these mailing lists to remove temptation from your daily life. If you find it difficult to say no to night out then pre warn your friends and family that you will be off the social circuit for a while as you are trying to sort out your personal financial budget. You will be surprised how many people are in the same boat as you.

Taking your credit card out with you is never a good idea so make a habit of leaving it at home as this will rule out any possibility of you buying something which you can't afford. If your credit card is charging you interest each month then consider transferring the debt to a new card which offers 0% on balance transfers. This could save you up to a thousand pounds over the tear, depending how much is outstanding on your card.

Get the Balance Right:

After a few months you will start noticing that you are not as poor as you normally are, thanks to your stringent budgeting. Don't use this knowledge as an excuse to start spending again. Any spare money should be used to pay off any outstanding debts on loans or credit cards. Alternatively you could set aside any spare cash for your miscellaneous category. If you don't have any financial emergencies for a few months then you could actually set up a savings account and use this money to kick start your new nest egg.

You should aim to sit down and review your budget at least once every couple of months to ensure that you are staying on target with your expenditure. Keep your notebook with you at all times because it's a good habit to have. For example you may be asked to contribute towards someone's leaving gift at work so you can record this amount in the book and later transfer it to the miscellaneous column of your budget sheet.

It can be difficult to try and make your money stretch, especially if you're on low earnings. However, it is possible to spend correctly and follow a personal financial budget by living within your means. If however you are overwhelmed by the state of your current monetary affairs then it's always worth considering seeking individual financial advice. An expert in this field will be able to figure out exactly where you are going wrong and advise you on the most effective ways to solve your problems.