A budget gives you an overview of your finances. The graphics below gradually guide you to a more structured economy.
By setting up a budget, you get a good overview of your finances. With the help of this overview, it will be easier to see the distribution of your spending habits and where in everyday life you can actually save money. A budget also reduces the risk of unpleasant surprises.
Here you get tips on how to go about creating your own budget and how to stick to the plan!
Why have a budget?
First and foremost, you should make a budget to get an overview of your own finances. Through this overview, you can easily see your income and what you are spending the money on. When you know how much you have to move around with, you can easily review your purchases and prioritize your money better.
In a budget, you will clearly see all your expenses, both the fixed and the variable costs. This allows you to easily “clean up” your finances and get rid of unnecessary expenses. You may also realize that you have some expensive fixed costs that you can change? In this way, you give yourself an insight into what expenses you can save money on.
By having an overview and control over your finances, you know what you have to move with. Which provides a certain security and safety.
It’s easier than you think to make a budget, but it’s just the first step. The most important and most difficult thing will be to stick to the budget.
It is time to introduce a budget when your life situation changes. This can be for example when you:
o Will move away from home.
o Should move in with your partner.
o Expecting a baby.
o Planning a large purchase, ex. house or car.
o Should retire or other changes in your income
o Want to get a better overview of your finances.
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6 steps on how to fix a private budget
Here is a guide on how to go about fixing your budget, so that your private budget is as clear as possible.
The 6 steps are as follows: Step 1: Write down your income Step 2: Write down your fixed expenses Step 3: Calculate your disposable amount Step 4: Write down your variable expenses Step 5: Estimate your future expenses Step 6: Make sure that your budget is in balance More visit here
Step 1: Write down your income
The first thing you should do when setting up a budget is to chart your income. You do this to find out how much you actually have at your disposal. Typical examples of income are salary, grants and return on investments.
If you are unsure what exactly these amounts are, you can easily go to your internet bank and check it out. The more accurate you are in entering your income, the better your budget will be.
Step 2: Write down your fixed expenses
Fixed expenses are expenses that you pay continuously. For example, it can be monthly, quarterly or annually.
Typical examples of fixed expenses can be rent, electricity, water, heating, subscriptions and insurance. Remember that interest rates and loan repayments also fall under fixed expenses. It is important that it is included in the budget so you set aside enough money to be able to pay the loan.
When mapping your fixed expenses, it is important to look back 12 months, because then you will get an overview of all the fixed expenses you have had during the past year. Here it is important to be observant and not only write down the fixed expenses that you pay per month but also the bills that come quarterly and once a year, such as electricity and membership fees.
The fixed expenses vary in practice from month to month, as the bills come at different intervals. It can be difficult to control or keep track when it varies so much. Therefore, you should adjust your budget so that you distribute the fixed expenses evenly over 12 months. By doing this, you are sure that you have invested enough money so they cover all costs when they come.
In the table below, you can see what you should divide the various expenses by, to make them fit in the budget. The result you arrive at after dividing must be written down during the months they apply.
Step 3: Calculate your disposable amount
Revenue – Fixed expenses = disposable amount
Disposable amount is what you have left to move around with after you have paid all your fixed expenses. This amount is what you have available to cover your variable costs. It is important to think about this amount so you know how much you can spend the rest of the month, so that you do not spend money you do not have.
Step 4: Write down your variable costs
Variable costs are the expenses that vary from month to month.
This is typically money you spend on groceries, clothes and gifts.
As these expenses vary, it can be a bit tricky to keep track of them. It may therefore be a good idea to go to your internet bank and look back at the last three months. It can give you an idea of how much you spend on average on variable costs.
It can be a good idea to categorize the variable costs, into categories such as: vacation, food, party, etc. It creates a better overview of how much you spend in each category.
Step 5: Estimate your future expenses
By getting an overview of what you spend your money on, you can plan based on how you want to use your money in the future.
A good idea is to start writing down the vital expenses, such as food. Then you continue to write down the other variable costs. Here one must also decide whether any expenditure should be prioritized more or less.
Remember that it can be a great advantage to set aside some money for the savings bank per month, because then you have a buffer in case any unforeseen expense should arise. Or if you want the luxury of it in the future with a trip, TV, car or the like.
Step 6: Make sure your budget is in balance
The whole point of a budget is that it should result in positive results or + -0. This is because the budget will help you spend less money than you earn.
A good rule to keep in mind is that the budget should be realistic, otherwise it will be easier to exceed it. Therefore, be critical of your own budget and evaluate if you think it holds.
If the budget becomes negative, then you need to either increase your revenue or reduce your spending.
Also read more about taking out a loan without UC
Good luck with your private budget!
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