Tips for creating a budget and sticking to it
August 17th, 2007 by 
steve
There are lots of ways to create a good budget. One of the best ways is to work out everything you earn and everything you have to pay for each month. Then you can create a budget on the things that you have to pay for with the amount of money you’re earning.
Creating the budget doesn’t have to take long and can follow a few simple steps:
1. Work out all your ‘committed costs’. These are things that you must pay for in order to live, like your mortgage, loan repayments, utility bills such as electricity and most other monthly bills that are fixed every month.
2. Next work out all your ‘essential costs’, such as food bills, how much you spend getting to work etc. Once you have worked this out, what you are left with is your disposable income. This is the income you have left to pay for things that you could do without like clothes, leisure time or a coffee at Starbucks.
3. Then list all the monthly ‘consumable costs’ you want to pay for on a monthly basis like a shopping trip to buy birthday gifts, or a hobby. This can change month by month depending on what you have to pay for or you can budget every month a certain amount to pay for things such as clothes and shoes or a holiday at the end of the year.
When you create the list of the consumable costs, the budget becomes almost useless if you are regularly buying things you haven’t budgeted for such as regular trips out to restaurants or the movies. All these things should be budgeted for and you will know when you have accounted for everything because you will be able to predict you bank balance very easily.
Another few tips to remember when creating a budget:
1. Don’t plan to spend all your money every month because this will mean you won’t be prepared for unexpected costs, such as paying a plumber to fix a burst water pipe.
2. Try to save every month to account for a sudden change in your circumstances and also to prepare as early as possible for you retirement. The earlier you start, the more you can save.
3. Try to be disciplined and stick to your budget. A budget will only work if you are willing to stick to it. If you stray from your budget then your money will start disappearing from your bank account.
4. Finally, keep track of your monthly costs and every now and again look to see where you can save money by cutting out things you no longer need or want. It can be surprising what we pay for when you actually look at it.
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