Planning A Budget To Live On This Year

It’s the start of the a new year, and you might be thinking about how you can look after your money a little more. By doing this, you’ll be able to pay for things that you want, saving in areas where you need to spend. The best way to do this is by planning a budget, and that’s easy. You can find the steps you need to take right here.

Work Out Your Average Earnings

The first thing you need to consider is how much you are earning per year. Write that number down and then reduce it just a tad. You need to think about the worst possible scenario and lowering that number will give you a little more money to play with, if you need it. At this stage, you don’t need to think about what happens if you lose your job. We’ll deal with that possibility a little further down.

Work Out How Much You Spend On Bills

The next thing you should consider inn creating a household budget  is how much you spend on bills and providing energy for your home. You can do this by looking at how much you spent last year or on average each month. But remember in the summer you’ll spend less and in the winter, you might spend a lot more. Again, this is why once you get that number you add just a little. This also provides you with yet more money to play with that you can consider extra. Once you have this number, subtract it from your income. Don’t worry if a lot of your income drops away at once. Bills always take up a significant amount of what you make.

Subtract Insurance Coverage

Depending on who you are and what type of lifestyle you live you might have a few different insurance plans. We understand that because it’s better safe than sorry. For instance, you might be paying for private medical insurance. If you’re not this is something you may want to consider. You might develop an illness in the future. It’s far better to get to go straight to a private hospital rather than wait for months to see a consultant. Once you have subtracted this amount, we should be getting near to the amount you have left to spend.

Other Necessary Purchases

But, before that there will be a few other necessary purchases you have to consider. You need to work out on average how much you spend on food this month. Typically, an individual is able to live on fifty a week for food. If you have a family, you should, at least, triple that number. Subtract it and then work out any other payment we’ve left out.

Dealing With What’s Left

You may think the amount left over is quite small. It might only be a few thousand. But you should remember this is what you can spend on everything else. It’s also your money for things you can’t foresee like a period of redundancy. This is why we’re going to subtract just a little bit more for savings. Divide that amount by twelve and lock some away each month. Then you’ll have money to fall back on in the event that you do need it.

What’s left you can spend on whatever you want and remember you’ll probably have more than that. We’ve been working on the worst case scenario, not the best.