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Budgeting for Beginners


It’s sometimes the case that many of us are unaware of our monthly incomings and outgoings, which can leave us in a situation where we are unsure of what we should be spending each month compared to our actual spend. Creating a monthly budget can help get your finances in order. Think of it as spring cleaning - tidy up those cobwebs and have a clear picture of where your finances actually stand, making it easier to plan for the future, whether it be a holiday, house purchase, new car...budgeting for beginners is easier than you think.

Easy Steps to Creating a Monthly Budget, Friendly for Beginners

  1. Monthly Income

    By making a record of all of your monthly income on a spreadsheet, you will create the starting point for your budget. Any income you receive from jobs, rental etc should be recorded here.

  2. Monthly Expenses

    List your fixed (non-discretionary) expenses here, which means every outgoing that you must pay each month like your mortgage/rent, food bills, utility bills etc. Checking back over your last few month’s bank statements should help you to have a rough idea of bills that may not be exact each month, like food bills that might vary slightly. This will help you to round up to an amount to input into your spreadsheet.
  3. Financial Goals - Motivation for your savings

    By creating a list of your financial goals, you will have a clear objective for your saving. For example, saving for a deposit on a house or clearing credit card debt. Treat these as expenses - if they are added into your monthly expenses, you will incorporate these into your monthly plan of outgoings, giving you a much clearer chance of achieving these goals.
  4. Additional outgoings

    There are always additional outgoings each month that will vary depending on what you are doing. For example, one month you may have a birthday present to factor into your spending, a night out, clothes shopping, a trip to the cinema, hairdressers etc. These costs can be adjusted based on your income and affordability.
  5. The Calculations

    Now you have all of the figures to work from, you should subtract your expenses from your monthly income. This will give you an indication whether you will need to adjust some of your numbers.
    Positive number = you make more money that you spend, leaving you with room to adjust your spending. For example, you may wish to increase the amount you put towards your deposit for a house.

Negative number = you spend more money than you make. This means that you will need to evaluate your additional outgoings to make some adjustments accordingly.

It may be that you break even, leaving you no margin for adjustment. If this is the case, it may be a good idea to look at your additional outgoings and reduce these payments slightly to allow you some movement.

Once you have this information to work from, it will empower you and allow you to keep track each month. Monitoring and adjusting your budget each month will also give you the opportunity to reach a much healthier bank balance, and the best part of actually having the knowledge about where your hard-earned money is going each month, will allow you to make better money decisions.

If you would like some advice and guidance on your financial situation, or would like more guidance on budgeting for beginners, our trusted and knowledgeable advisors at Cotswold Financial Planning are here to assist you in your financial queries. Contact us on 01608 651608 or via our enquiry form and we will be happy to discuss your requirements.