Knowing how to budget properly can mean the difference between drowning in debt or keeping your head above water. Maintaining control of the family finances is vital in these tough and uncertain times. Knowing how to budget properly therefore is essential.
Economic Downturn
Just about everyone will have felt some impact from the global financial markets meltdown or the subsequent recession. House prices have fallen, investment and pension portfolios have dropped in value and savings rates plummeted. Those fortunate to have a job in the private sector have seen wages held flat at best or greatly reduced due to short time working or enforced pay cuts. The axe will soon start to fall on whole swathes of the public sector too so even these once secure jobs for life areas will start to feel the full force of the economic woes we now find ourselves in.
Why You Should Budget
It is, therefore, even more essential to make sure you know what money you have coming into the house and, more importantly, where it goes each month. Easy credit is no longer available to bail us out in the short term so living within our means is not only sensible but essential.
How Much Are Your Expenses?
Time, then, to get a grip on the expenses side. This is all part of knowing how to budget properly. If you have never compared electricity and gas providers for cost then now is a good time to do so. Even if you are on a fixed term contract it may pay to forfeit the penalty and change to a lower cost provider. Likewise, telephone and broadband suppliers are eager for business so deals are available.
There is little you can do about the council tax and water. These are givens – although if you do not have a water meter and are a couple living in a home without a meter it would probably pay to have one fitted. You have a year to see if the cost savings are worthwhile before being locked into a metered supply.
Dangers of Credit Cards
Impulse purchases have to go by the by on a budget. Make lists and stick to them. Do not take credit cards out with you – draw enough cash from the cashpoint to cover what you need to buy and then go shopping. If you do not have the cash or a credit card then you cannot buy!
Change supermarket for at least part of your shop. Asda and Tesco are cheaper than Sainsbury`s or Waitrose. Buy fresh food rather than prepared meals and you will save a small fortune.
Holidays
Holidays may have to be taken closer to home. That said, there are some overseas bargains to be had with careful hunting through the deals. Remember that the state of our economy has badly affected the value of the pound abroad so forget what you paid last year for meals and drinks and add at least 20%! You must know how to budget properly for holidays otherwise you can find yourself in debt due to overspending.
You can avoid a debt management programme by carefully planning how you spend your income. After a couple of months on a reduced budget you will adapt and it will become the norm. Short term pain means long term benefits and the ability to build a cash nest egg in case the worst happens in the future.
