Budgeting more effectively

Trying to budget effectively can be difficult and frustrating for many people, and balancing your income and outgoings is not always an easy task. However, it is important to ensure that you budget properly otherwise you could quickly find your finances turning into a mess. Budgeting can be even more difficult for those that are not used to living away from friends and family, such as first time buyers or those renting a property for the first time, and in cases such as this a little early preparation can prove invaluable.

If you are planning to move in or are already living with a partner then you need to decide whether you are going have individual bank accounts or opt for a joint account. For many having a joint account is the simplest and most straightforward solution and can make budgeting easier. However, many people prefer not to combine their finances, particularly when they first move into together. Whether or not you opt for a joint account or individual accounts is up to you. If you are not moving in with a partner then, of course, you won’t have to worry about making this decision.

Joint account holders and singles

If you are single there will only be one income to deal with, and if you hold a joint account with a partner both of your incomes will go into one account. In both cases you will only have to deal with one account when managing your finances. The best way to deal with your finances is to list your income and then list all of your regular outgoings, such as rent, council tax, insurance payments, water bill, gas and electricity bills, phone bills, mobile phone bills, cable or satellite bills, pension payments, and any other regular outgoings that you have. Don’t forget to add any regular loan, credit card, and debt repayments that you make each month.

In addition to regular bill and debt repayments you also need to account for other regular expenditure. This could include money for petrol, spending money for outings or entertainment, money for cigarettes if you are a smoker, money for grocery shopping, and any other regular personal expenditure. You must also remember that there are one off payments that you may have to make at certain times of the year, such as paying for your MOT or car tax. Make a list of any occasional payments at the back of the book that you use to conduct your budget, or as part of your spreadsheet if you are using the computer to list your monthly income and outgoings.

It is also worth remembering that there are certain months of the year where you will not have to make regular payments on certain bills. For example, if you pay your council tax and water rates on a monthly basis, there are a few months each year where no payment will be necessary, as your council tax is charged over ten months rather than twelve, and your water over eight months. Make a note of he months when you will not have to make these payments, and you will then know that for those particular months you have a little extra money to play with.

If you have a set regular salary or income coming in it is a good idea to list your income and outgoings for twelve months – you will find that this is pretty much the same for many months, other than the ones where you have one off payments or where you do not have to pay water or council tax. This way, when payday comes around you can simply refer to your accounts and you will know exactly what is coming out and on what date (it is advisable to list the dates that each repayment goes out, and wherever possible change your repayments so that they all come out at around the same time – this way you will know that by a certain date all of your bills and repayments will have gone out). You can then see how much spare cash you have, and more importantly you can ensure that your account does not exceed its limit.

Separate accounts

If you are moving in with or living with a partner and you choose to have separate accounts then one of the easiest way to budget effectively is by splitting the finances. So, for instance, one of you might take responsibility for the rent or mortgage whilst the other takes on the household bills and groceries. Other than this, you would list your income and outgoings in the same way as above, although it does mean that you will both have to take the time to keep on top of your finances rather than just one person being in control.