How to make a simple budget and stick to it

On more than one occasion youíve probably felt that you are a victim of I.D fraud and someone has committed the horrific crime of stealing all your money.

Unfortunately the only crime that has been committed is not keeping an eye on your finances.

Saving can be extremely difficult during these tough economic times, especially when the cost of living has increased dramatically over the last year.

It can be far too easy to over spend on everyday essentials and the odd treat.  With Britain experiencing inflation levels at a three year high, spending has become significantly more expensive and saving increasingly hard.

Yet budgeting doesnít have to be a hard slog as long as you keep on top of your finances. Here are some top tips on creating a budget and sticking to it.

1. Keep note

By keeping a diary of everything  you spend, you can see that it all adds up.

If you do this for a week, by the end of it, it will become clear what most of your money is spent on. You can then make decisions as to what you can cut out of your weekly spend. Recent studies have found that heavy coffee drinkers could end up paying as much as £2,000 a year, which is more than the cost of the average annual dual fuel electricity bill!

A heavy coffee drinker is someone who drinks more than 21 cups each working week, however, even the average consumer spends £452,28 a year on drinks bought at coffee shops.  By taking note of what you spend you could cut down on everyday expenditures such as coffee, which may be eating into your bank balance without you even realising it.

2. Set a goal

It is important that you set an end goal of how much you wish to save in a particular time frame. With this, your budgeting mission will have a purpose and sense of meaning.  If you have something to aim for you are more likely to want to achieve your goal.

Donít be over ambitious with your financial goal, as this will put more pressure on you to try and maintain a budget that may not be possible.  Make sure your budget is reasonable so that you can stick to it.

Set aside an hour each week to review your budget and spending so that you can see how you are doing financially. By looking at what you are saving on a regular basis it will encourage you to save more.

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3. Make compromises

There are likely to be times when youíve set yourself an allocated budget for the month but then something unexpected comes up or you want to splurge out on an item or social event that exceeds your initial budget limit.

 The way to manage this is by setting yourself different budgets for different aspects of your spending. For example you should set aside X amount for food per month and X amount for entertainment and non-essential items. Should you want to spend more on non-essential items, make a compromise by reducing your food budget.

4. Free activities

Make a list of a least 100 things that you enjoy doing that donít cost you any money or are very inexpensive. Try and tick these activities off throughout your budgeting period. Keep it on you at all times so that you can look at it to remind you of your budget.  

If you have children there are many activities that you can do for free.  Simple things like walking in the park, feeding the ducks and going to the beach for a day trip are fun free things you can do with children. There are also hundreds of vouchers and discount websites, which offer discounted deals such as family days out as well as discounts on shopping.

If youíre going out for dinner and drinks often, cut down on drinking alcohol and go to more affordable bars when you do want to drink out.

5. Treat yourself

Budgeting doesnít have to be a gruelling lifestyle altering process whereby you canít have any fun with your cash.  Once a month or week treat yourself to something which is reasonable. If you have sacrificed eating out at lunch for four weeks, with some of the savings treat yourself to a new item of clothing or DVD.

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