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We all want to be good with money, but it’s hard to know where to start, and even harder to set a budget you can stick to. However, with a strategy and self-discipline, taking control of your finances can be a lot easier than you think. It doesn’t have to involve lots of spreadsheets or penny pinching – you just need a few simple ground rules.
Being realistic about your finances is the key to coming up with a budget that works. Luckily, with moneydashboard.com there’s no need to dig out crumpled receipts from your pockets. The free budgeting software gives you a hassle-free way to track your income and spending with easy-to-follow charts and automatic tagging, so you know exactly how much money is going where.
Start by checking out your total monthly income, and whether you spend over or under it. Then use moneydashboard.com to see what proportion is going on things like travel, groceries, eating out or debt repayments. This will help you get an accurate idea of your spending habits.
Whether it’s saving for a dream holiday or simply making sure you don’t stray into your overdraft, every budget should have an achievable goal. Once you know how much you have to spend and what your major expenses are (think rent and bills), you’re in a great position to set a realistic target, with an emphasis on the ‘realistic’.
This could be a monthly amount you’d like to put away for a rainy day, or it could be living within your means until payday. Starting small will make it easier to adapt your spending habits to a target-driven approach, so you’ll be working up to bigger goals in no time.
With knowledge of your spending habits and your new goal, you can start putting together a basic budget. First, tot up your total income for the specific period you’re budgeting for. For example, if you know you’re getting a 10 per cent bonus this spring, factor it in. Then deduct the money you know is coming out.
Next, check your records to see how much you usually spend on groceries. You can use moneydashboard.com to find this information and put it into a calendar, so you’ll be able to see how much disposable income you’ll have left after these expenses. Then you just need to divide this between what you want to spend and what you want to save.
Work out where you can cut costs and turn that into a savings plan
To make sure you can achieve your goal, work out where you can cut costs and turn that into a savings plan. Is that morning takeaway coffee adding up to more than you thought? Could you cut your energy bill by switching provider? Or is it time to move to a better value supermarket for the weekly food shop?
Finally, include your new savings in your budget – you might be surprised at how much they could help you save. Once you’ve got your budget set up, your goals firmly in sight and your action plan ready to go, it’ll be far easier to streamline your spending and build up those savings.