Is it time that personal finance’s dreaded “b” word got a makeover?
While budgets sometimes get a bad name, a well-managed budget can be a hugely powerful tool to get you to your financial goals – and allow you some fun along the way.
Here are a few things to think about.
Set your goals
A good place to start could be to set some goals that you want your budget to help you to work towards.
It’s much easier (and more enjoyable) to stick to a budget when you know it is getting you somewhere you want to be.
Your goals could be a mix of short-term things and long-term ambitions – it can be helpful to have little wins to celebrate along the way if you’re working towards something that’s going to take a bit of time.
Once you have your goals set you can work out what you need from your budget to make that happen.
Set a budget
Next, you can draw up the budget itself. How you do this probably doesn’t matter a lot – you can use apps, spreadsheets or a bit of paper that you stick to the fridge.
It can be a good idea to pull up some recent bank statements for a reality check on where your money is going now. You can then look at whether you need to make any adjustments to your spending to give you the surplus that you need to hit those goals you set yourself.
It's usually a good idea not to make a budget too tight. Giving yourself a little room to move makes it more likely that you’ll be successful, even if it takes slightly longer to hit your target.
Track your progress
How are you getting on? Schedule some time in your diary or calendar every week or month to check how you’re progressing.
Are you sticking to the budget? Are you making progress towards your goal? If you can identify places where your budget is blowing out, you can consider ways to fix it, or whether you need to amend your budget, before it becomes a major problem.
Use the tools available to you
There are lots of budgeting tools at your disposal. Your bank may offer some on its online banking platform and Sorted offers a range. There are also apps that can help, such as Pocketsmith or Spendee.
Don’t get knocked off course
As you’re working towards your goals, there’s every chance that you might encounter some financial challenges. Don’t let them put you off course.
It can be helpful to have an emergency fund saved so that you don’t have to bust your budget to meet any unexpected expenses.
You might also identify some areas of your budget that could be trimmed further if something happens that requires you to tighten your belt for a bit.
Allow yourself some kindness, too. A bad month doesn’t have to mean that you give up on your plans.
Having appropriate insurance cover can help to ensure that a health event that means you cannot work does not derail your financial ambitions.
Time to check in?
If you’re overhauling your financial life and want to do everything you can to stay on track, drop us a line. Insurance can provide serious peace-of-mind to those working towards financial goals.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
