Last week we looked at how your spending could be damaging your dreams, this week we explore what to consider when creating a budget.
What you need to consider when doing your budget
There are many things you need to consider when creating a budget. Firstly you need to accommodate for the unexpected, such as what you would do if you lost your job. Do you have enough savings? Typically financial experts advise to save six months worth of living expenses to cover us for such an event.
Other things to consider are the different types of insurance, pension plans, medical cover, car costs and car emergency fund for repairs. Below is a brief list of these things so you can do your research and get the necessary cover. Whilst you might not think all of these things necessary it is well worth seriously considering acquiring them as it could save you being in a precarious financial position in future.
- 6 month living costs emergency fund
- Joining a work union (monthly fee)
- Life / critical illness insurance
- Work, lost earnings insurance
- Medical cover
- Car savings and annual car expenses
The next stage is ascertaining your monthly expenses.
Assessing spending (current), incorporating paying off debt monthly