finances

Budgeting in action: do the ‘Monthly Savings Budget – Five Year Plan’

Please download Accessible Psychology’s ‘Financial Budgeting Spreadsheet’ below, to take part in today’s exercise:

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 219 times – 17 KB

 

Monthly Savings Budget – Five Year Plan

 

Now you have how much each of your three goals will cost in terms of money you can incorporate this information into your ‘Monthly Savings Budget – Five Year Plan’.

 

First of all, check that the amount you find in the ‘Total Monthly Savings’ column matches the amount in the Monthly Expenses and Savings Sheet – specifically the ‘Budgeted’ ‘Total Monthly Savings’ cell. If it does you can skip the technical bit!

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Why spending could be damaging your dreams; How to create a budget that supports your life goals Part Three

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

Last week we explored what to consider when creating a budget and assessing your current spending. This week we examine how to cut back on spending and how to create a life goals budget.

 

Cutting back on spending

 

Once I honestly assessed my current spending I evaluated what I could cut back on and drew up a revised monthly expenditure sheet. Although I felt a strong inclination to make major, often unrealistic, cut backs, I knew I had to be practical in terms of what I needed to live on whilst also being thriftier with my monthly spending. I also made a plan to pay off all debt, a non negotiable element of any budget.

 

To do this yourself, simply use the second column on the first sheet of my downloadable spreadsheet.

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 219 times – 17 KB

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How effective budgeting can help save partnerships

Everyone knows that nearly half of marriages end in divorce, but did you know that studies have now found that fighting over finances is the number one predictor of divorce? Indeed fifty percent of those that do divorce end their marriage because of financial tensions.

 

Effective budgeting and planning your finances together can literally save a marriage. I’m not necessarily suggesting every married couple has joint bank accounts but creating a household budget together in a transparent way has a whole host of advantages.

 

Tim Maurer listed these advantages in his article for Forbes titled ‘10 Ways Budgeting Saved My Marriage’:

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Budgeting in action: research and create a ‘Life Goals Budget’

Please download Accessible Psychology’s ‘Financial Budgeting Spreadsheet’ below, to take part in today’s exercise:

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 219 times – 17 KB

 

Life Goals Budget, Part One

 

Now for the super fun part! Research your top three life goals and how much they will realistically cost. Then enter in the amount you will need to save, entering in when you will start saving.

 

Remember to pay off all debt before saving (this is a goal in itself) and to save for things like six months worth of living expenses, pensions and insurances as well as your life goals.

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Budgeting in action: create a revised and realistic monthly budget

Please download Accessible Psychology’s ‘Financial Budgeting Spreadsheet’ below, to take part in today’s exercise:

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 219 times – 17 KB

 

Monthly Expenses and Savings Sheet (Budgeted Column)

 

Last week we entered in our current expenses in the ‘Actual’ column, this week we’ll fill out the ‘Budgeted’ column.

 

When creating a budget it is vital to do your research into how much things realistically cost but also honestly assess what you can cut back on. Do you need to buy lunch? Could you make a sandwich and take that to work instead? Do you need to spend as much on entertainment? Could you perhaps drink before going out and then just top up when on nights out in bars? Would buying a monthly pass for travel be less expensive than paying daily travel costs?

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Why spending could be damaging your dreams; How to create a budget that supports your life goals Part Two

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

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
  • Pension
  • 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

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What does financial freedom and security mean for you?

Take five minutes to think about what financial freedom would look like for you. How much money would you have in savings? What goals would you want to save up for? Would you start contributing to a pension or contribute more to your existing pension? What insurances would you want to get should the worst happen? Would you want to save money for your children?

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Why Effective Budgeting Empowers Us

It’s a sad fact that millions of people in the UK have just £100 in savings, with the US not far ahead only having $500 in savings. Living without the stability of having emergency savings (typically advised by financial experts as needing to be six months worth of living costs) can have a huge psychological impact. Anxiety, depression and stress can all be symptoms of being financially insecure.

 

Although budgeting may be a scary prospect considering the state of most people’s savings the alternative is much worse. What if you lost your job? Would you have enough savings to support yourself and possibly your children whilst you look for another?

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My budgeting journey and what I learnt

In my early twenties I worked in a bar earning just over the minimum wage. I thought budgeting on such a small salary was impossible. I was often late paying my rent, ran out of money for food and had to be bailed out by my parents on more than one occasion. Before you say it I know, I was incredibly fortunate to have my parents support and there are those that do not have parents who are able to loan them money in times of need – making budgeting even more essential.

 

It got so bad I even lost weight as a result of not being able to afford food. The crazy thing is that I was wasting money on fast food when I could have, with just a little planning, bought healthy food at a supermarket which would have been cheaper and lasted longer. Impulsive spending to make myself feel good and a lack of financial discipline were at the root of my problem.

 

Here are some of the cheap ways which we can make ourselves feel good that I’ve picked up along my budgeting journey:

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Budgeting in action: List your current spending on the ‘Monthly Expenses and Savings’ sheet

Over the coming weeks I will talk you through how to fill out the spreadsheet so that you have a detailed and all-inclusive budget which will enable you to achieve all of your life goals and obtain a greater level of financial security than ever before. If your budget changes in any way the formulas have been designed to account for this and do all the working out for you.

 

Firstly you will need to download the spreadsheet by clicking on the button below…

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 219 times – 17 KB

 

Remember, the aim of this series is not merely to budget, but to budget in such a way that it allows us to achieve our life goals, so, even though you might dread listing your current expenses – it will be worth it, I promise.

 

Monthly Expenses and Savings Sheet

 

As you can see the first tab relates to monthly expenses and savings and is designed so that all potential expenses are accounted for. First of all enter in your monthly salary after tax in cell 3C.

 

Feel free to add or change expense categories to tailor this sheet to your unique expenditure.

 

However if you do add rows for more expense categories remember to enter in the following formula as listed in ‘The Technical Bit’ so that it adds things up correctly:

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