It is common knowledge that living within a budget can greatly aid you in saving money. By having a proper budget, you can keep track of your money and where it is going. This is all good and well, but what happens when your current budget just isn’t cutting it anymore?
This can happen to anyone because life is always changing and this will cause your budget to change as well. With the cost of living constantly on the rise, and personal factors always altering you will often find yourself having to rework your budget (at least more than once a year). Due to the fast-approaching new year, we know that many people are beginning to consider reworking their budget for 2016, so we have compiled a small list of things that you should do when reworking your budget:
- Once you’ve made the decision to rework your budget, you should gather all paperwork from the previous months such as bills, statements and purchase receipts.
- Start by recreating a list of your current household income and expenses. You should follow this up with a list of New Year major expenses (such as purchasing a new home or going on vacation).
- Review all your receipts, bank statements and other payment documentation and then list all the fixed expenses you have for every month (rent, insurance policies, utilities etc).
- You can then move on to checking other bills and receipts to see where you are spending unnecessary money, such as paying for a gym membership but not actually using it, or having a magazine subscription for a publication that you aren’t reading. Once you have rooted out all the unnecessary expenses, you can begin chopping them out of your new budget.
- Recheck all of your banking, credit card and other fees that you have to be making on a monthly basis to ensure that you are aware of any new increases and can re-budget for it.
- Work with baseline amounts: expenses can fluctuate, so you need to be prepared to spend more at any given time. Go over the previous months’ expenditure list and come up with a realistic baseline amount for expenses.
- Lastly, make sure that a small amount of your income goes directly into your savings. By setting this aside as soon as the money comes, you will have to budget around it and you will thank yourself later for having saved.