Home budgeting is one of those things you either do or you don’t. It comes naturally to some people and for others, it bores them.
I, for one, love budgeting and find money management calms my soul. Knowing how much my bills cost and what I have left to spend each month means I’m never worried about accidentally spending my council tax bill on a new pair of DMs.
But whether you love it or not, budgeting is always a good idea. Even if you create a basic income and outgoing sheet, you’re never going to be worse off for it.
If you’re not sure where to start, don’t worry, I got ya. I’ve budgeted for years and ever since I moved out, I’ve impressed many people with my meticulous monthly home budget spreadsheet.
Let’s walk through the basics.
Where to make your home budget
You can create your monthly home budget using spreadsheet software like Microsoft Excel or Google Sheets but let’s be honest, the internet is crawling with free templates.
What’s coming in
List your reliable monthly income, so that’s anything that comes in regularly and you can plan in advance. This is probably your salary or child maintenance.
If you make money from odd jobs or a hobby, but it’s irregular, don’t include it here. The aim of this budget is to calculate a realistic outline of your cash flow.
But if your income varies because you’re self-employed, use your average or estimated monthly income.
What’s going out
Write down all your non-negotiable outgoings, from the mortgage and council tax to Netflix and that gin subscription you pay wayyyyy too much for.
If you can’t remember everything, check your recent bank statements and direct debits to capture everything. Don’t forget about any annual bills you may pay for like your car insurance or a Headspace subscription.
I recommend writing both the company and the price. Once you’ve done that, split them into categories that make sense for you. I split mine into:
Housing: Mortgage, service charge and utility bills
Transport: Car finance, insurance and tax
Insurance: Life and contents insurance
Other: Netflix, gym and Spotify
If you have annual or quarterly bills, you should still note them down on your monthly home budget. For example, if you pay your car insurance annually, you can divide the estimated total cost by 12 and then save the money away each month so it’s easier to pay when you renew.
Also, think about your monthly costs that aren’t direct debited. Do you get your hair cut every four weeks? How much does your commute cost? Have you included your weekly food shop?
Whatever it is, be honest and put these down because otherwise, you’ll get to the end of the month wondering why you have no money left.
Pro tip: I’d recommend opening a second current account for all your outgoings, or a joint one if you’re sharing the bills with your partner. This means you can transfer your expenses when you get paid and never need to worry about not having enough money for that pesky gin subscription.
Save a bit
I recommend prioritising a bit of saving. No matter how much it is, you’re never going to regret putting some money aside for a rainy day.
Be sure not to put too much away though, because there’s no point in saving if you’re left short each month and transferring the money across. It’s better to keep it small and consistent than unmanageable.
You should open a separate savings account for this money, or use pots if you have a Monzo account. Out of sight, out of mind.
Pro tip: I go a step further and have separate Monzo pots for different savings including holidays, fun stuff and the do not touch fund.
Finally, add up your expenses and savings and subtract them from your income (my spreadsheet does it for you automatically). This is what you have left to play with.
If you’ve included things like your commute money and food shop, everything else should be free for you to do as you please.
If you’re confronted with less than you thought, you should review your expenses and see what you can live without, or whether you should try and get a cheaper deal. Your landlord is unlikely to reduce the rent, but maybe you don’t need a four-screen Netflix subscription.
Even if you can’t reduce any of your outgoings, keeping a home budget will help you stay fully aware of your finances and manage your money.
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