John Cameron's personal blog

Serious discussion about your financial position now - and in the future.

Budgeting – Boring But Essential.

One of the most powerful tools in financial planning is the boring old household budget – especially on the expenses side.

While there are many reasons why people get into financial difficulty, one of the most common is overspending. And, before you can control your spending, you need to know what you are spending, and where it is going.

Also, your spending is the one thing over which you have the greatest control. You can’t control interest rates, or the stockmarket, or your future job security (and hence income). In this age of uncertainty, it makes sense to have a good handle on the things that you can control – such as spending.

So, how do you organise a budget?

• Start by listing all expenses over a given period. A full year is normally recommended in order to capture all those one-off annual expenses.

• Group your expenses under various headings, such as: Living Expenses; Entertainment; Housing; Motor Vehicle; Insurances; and Miscellaneous.

• Within each group, break it down further. For example, you might break Entertainment down into Travel; Holidays; Dining Out; Subscriptions; Club Memberships; Other (there are always others). 

• The exact list of expenses will vary depending on lifestyle and personal circumstances.

• When you have done this, you are well equipped to start the serious stuff. You can analyse the figures and you will probably find there are many things you have been spending on, which give you no purpose or pleasure (in other words, wasting money). Then the serious stuff of cutting expenses can start.

In summary, a budget can help you get control of your life. Knowing where to start is sometimes difficult, but there are many Budget Planners which provide a structured format.

Download our Black Swan Event Budget Planner: BSEBudgetPlanner.pdf



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