Your existing budget isn’t working and you need a new one fast
How do I know?
Because if it was there wouldn’t be this panic right now about how on earth people are going to afford increased mortgage rates, increasing living expenses and whatever comes their way if we do head into a recession, be it minor or more significant.
Inflation now exceeding 7%, interest rates increasing, the continuing strain on businesses and supply chains from Covid, these things are putting increasing pressure on everyone.
It’s important to find ways to release some of that pressure so that you can ride the financial ups and downs being experienced currently.
Easily create your instant money budget by using this simple and effective method
A well designed budget that functions correctly will be simple not complicated. The more complicated you make it the less likelihood you will stick to it.
Here’s how you keep your budget simple and effective.
Your budget should have four components to it, and every expense should fit within one of these components.
Debts – These are your contractual commitments like your mortgage/rent payment, personal loans, HP/s and Credit Cards etc.
Fixed Expenses – These are the 'non-negotiables' so that life can function, food, petrol, clothing, school costs etc.
Lifestyle Expenses – These are more fluid, the nice to haves, sports and hobbies, takeaways, entertainment etc. These are expenses that if finances become tight can be halted or reduced for a time until you have your finances working better.
Savings – The one we all leave out because once we have written out a budget for everything that fits in the top 3 categories I mentioned there is nothing left.
Here’s how you start saving money regardless of your situation.
We all have a minimum savings capacity and it is different for everyone. When we apply this to our budget then in times of uncertainty like we are experiencing right now, we don’t panic. We have a resource that helps us navigate through the ups and downs.
The best time to calculate your minimum savings capacity is immediately after identifying your debts. Then once that is applied to your budget continue working through your other expenses and if when you are done, there is money left over, simply increase your savings amount you want to put aside each pay.
And if there is nothing left over, don’t panic because your new budget now has a minimum savings amount starting to accrue so your now on the right track.
Of course if you are in deficit (more money needed to go out than you have coming in) you will need to go back over your budget finding places to trim expenses, now you are hopefully getting the picture why I recommend your expenses are split between 'Fixed' and 'Lifestyle'
How do I work out my minimum savings capacity easy?
It’s really simple, use the handy calculator here
Or better still why not jump on board and use the 'Money Managed Smarter' personal budgeting system which has this function and many other helpful features already built in.
Features that are designed to help you budget smarter. For less than a cup of coffee a week you could have your budget up and running in no time and be on your way to a much less stressful future.
