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Budgets are incredibly useful tools and an important part of our financial health.
- They help us stay on top of our bills and reduce financial worry
- They ensure we do not spend more than we earn
- They enable us to allocate money towards financial goals
When it comes to maintaining a budget within a tough economical time, there are a few things to consider to manage your money successfully.
Firstly, the budget needs to prioritise your top financial priorities and focus on key areas of your expenses. Secondly, you want to ensure your budget is realistic and is setting you up for success, not to fail.
Thirdly, you want to be aware of your own financial behaviours and find ways to stick to the budget.
So lets dive into these in more detail…
Your budget helps you prioritise the important expenses
When it comes to managing your money, you want to ensure the important bills are paid first and foremost.
You want to have enough money to cover all of your fixed expenses – all the things you are committed to paying throughout the month.
Fixed expenses are bills that are paid on a set date at a set amount. For example, rent or mortgage, utility bills, phone bill or internet, council tax etc.
Calculate your income, then minus your fixed expenses, and this leaves you with your disposable income. The remaining money is for you to spend throughout the month on general spending and on your financial goals.
Prioritising your financial commitments within your budget ensures you stay up to date on payments, and provides a peace of mind helping reduce stress and financial worry. .
Your budget needs to be realistic
If you do not have enough to cover everything within your budget, the focus should be on increasing your income or decreasing your outgoings.
The quickest and easiest place to start is to identify the difference between your needs and your wants and then ask yourself if there are any expenses that you can sacrifice for the short term to ensure that you have enough to live off.
Be really honest with yourself, and know that this does not have to be a permanent change but something that might ease your financial stress right now.
For example if you are paying for a gym membership that you don’t really use.
Become aware of your own financial behaviours
Having a budget is one half of the job, but sticking to the budget is usually the part where people struggle.
Our money behaviours are rooted in emotion, so how we feel about ourselves and about money right now will have a huge impact on your ability to stick within a budget
If you find yourself always overspending or going outside of your budget, become aware of the emotion that drives that decision.
Are you overspending when you are sad, bored, stressed, or lonely? Can you see any patterns within your spending?
Become aware of emotional triggers and create coping mechanisms to change your emotional state in the moment that do not include spending money.
For example instead of going shopping, can you call a friend for a chat, or go for a walk in the park (you will be surprised how moving your body has a huge impact on your mood!)
These three main points should help you create and maintain a budget during a time where inflation is rising and prices are increasing. And sets you up for financial success in the future because you are improving your money management skills.
Laura Ann Moore is a certified financial coach, financial wellbeing speaker,and host of the Mind Money Soul podcast, talking about finances in a fun, judgement-free way to help people feel good about money, get financially confident, and build wealth.