life goals

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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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 144 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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