How to Budget

How to Budget

Budgeting is important because it helps protect you when you’re in a position of needing money and from the unexpected. Most people think that budgeting restricts them. However, the reality is having a budget is one of the most freeing things you can do for yourself.

Why is Budgeting Important?

Having a budget is about planning for the future. It is also about having financial control in the current place you find yourself. A budget shows you where you have money, where you need it and where you can save. Having a written or electronic budget system ensures that you’re aware of where you truly spend your money. Many people have an idea or think they know but discover that once they draw up a budget it differs. Actually knowing, gives you better control over your life and helps make you less anxious. And when you know you can, you’ll have the choice to buy something you want guilt free!

How to Start Budgeting

It’s important to write things down exactly as they are – not what you hoped your finances to be. Additionally, keep things simple. The more complex your budget is, the more time it’s going to take to review and update. Which is most likely going to result in you avoiding your monthly budgeting date. And therefore, ignoring your financial situation. This is especially true if you are short on money or are in debt.

The 3 Basic Budget Categories

1. 1. Essential (fixed expenses) eg, rent, transport, loan payments, electricity, food…
2. 2. Savings eg: cash, items of value that can be sold or used as collateral, investments…
3. 3. Non-Essential (flexible expenses) treats, eating out, entertainment…

3 Steps to Build a Budget

1. 1. Income: This is the money that you are guaranteed to get in every month. Not what you hope to get or might be receiving in the future.
2. 2. Savings: How much cash do you have? Are you currently able to put anything aside? Do you have investments?
3. 3. Expenses: Start with your essential list of expenses and divide those further into monthly, weekly and daily costs. Then add the things you’d want or enjoy doing from your non-essential spending list.

Now compare your income and expense totals. Ideally, what you need is for your income to be higher than your expenses. At very minimum your income and expenses need to be equal. Otherwise, you are going to go into debt.

If your expenses are more than your income then you need to see how you can decrease them. First look at your non-essential category list. Eliminate the things that you like but could live without for a while. Also look at where your daily essential expenses can be decreased. For example, think about switching branded products for no-name or a shop’s in-house-brand. If that still isn’t enough to cover your expenses, then look at which fixed expenses you can decrease.

How to Allocate Your Income

A guideline to allocating your income within a budget, is to divide your money according to the 50/30/20 principle. This means allocating 50% of your take-home income to fixed, weekly and daily expenses. 30% to the nice to haves (non-essentials) and 20% to savings. You may not be able to do this right now or want to allocate things slightly differently. But keeping this principle in mind can help you to roughly figure your budget out. And it can give you a healthy financial goal to work towards.

Remember, there is no right or wrong way of doing things. Getting it right takes time so keep a simple budget. One that’s easy to update, doesn’t overwhelm you and easily shows you if or where you need to adjust things. The key is to consistently be honest about the numbers. And then check-in with your budget and adjust it when or if it’s necessary.

Loans and Budgets

At some point you may need a loan. This doesn’t mean you’ve blown your budget or that you’ve done something wrong. It may just be a reality of life.

Therefore, if you do need one, work out how much you can afford in monthly loan payments. Then talk to an expert at a reputable company. There are different types of loans. Some of them are inherently less risky than others. For instance – collateral loans are usually less risky than those which are linked to pay- day or salary linked loans.

Coughlans has over 110 years’ experience in assisting individuals and businesses access cash when they need it most. We do this by offering excellent interest rates on Gold & Gold Jewellery collateral-based cash loans. Thereby, enabling you to bridge a cash gap, using what you already own. This also means that those who are blacklisted, have bad credit or don’t have an employment history, are still eligible for our loans. We also buy Gold & Gold Jewellery for cash. Contact us today to find out more.

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