Working out a realistic budget is a great way to take control of your finances. Although it may seem like a chore, it’s the crux of sound – and sustainable – financial management.
- The principles of budgeting are simple – calculate your income less expenditure.
- It’s easy to underestimate expenditure by overlooking occasional costs.
- Grouping your spending into categories like home costs, clothing, food etc. can be helpful.
- A great budget will anticipate large or unexpected purchases like replacing a fridge or paying for school excursions.
- The best budgets are realistic and don’t work on ‘best case’ scenarios.
A budget shows you how much money you’re earning, how much you’re spending, and how much you’re saving.
While it can be tempting to put it off, creating a realistic budget can help you hit your savings goals faster.