Money can be a huge stressor for many people and we understand why. Knowing that you are able to cover everything in a week or month can fill you with anxiety. We are in the Cost of Living Crisis right now where everything seems to be costing more. This means many people are truly struggling. Having a budget plan can really help in this situation. We are going to talk about why today. We even have a couple of free downloads for you to give you a helping hand.
Why Budget Plan
A budget plan can be a simple monthly or weekly activity that helps you know what you have coming in, versus going out. It doesn’t have to be complicated and could benefit your mental health.
The main plus of budget planning is undoubtedly helping to reduce stress and anxiety. Having that knowledge about what money you have enables you to plan and be proactive about any potential problems.
Knowing that all of your bills will be covered, food will be in the fridge and any spare you might have means you aren’t constantly worrying. You already know that at the end of the month you will have X amount to spend on your lifestyle.
This is particularly poignant as the six weeks holidays are upon us. Keeping the kids entertained can be pricy. With them at home every day our food bills increase, gas and electric bills rise and there is the added cost of days out.
Having a clear and concise plan allows you to see what funds you have at any one time. It also helps improve your spending habits.
How to Budget Plan
It can be daunting at first and even overwhelming, but fear not we are here to help.
- WRITE EVERYTHING DOWN.
- Column 1 –
Know exactly how much you have as income. Include everything from your wages, any benefits you receive to things you sell on Facebook.
- Column 2 –
Work out what bills you have and when they come out. This is key, be precise. Remember to include council tax, TV Licence, gas, electric, insurances, rent/mortgage, TV packages and phone bills.
- Column 3 –
Note down the things that aren’t regular bills such as food shopping, petrol, coffee with friends, travel costs.
- Decide how you wish to work, is it from the 1st of the month or perhaps payday?
- List everything in your columns in date order – you can do this with a running tally or with a total at the end.
- What you have left over is your expendable income. This is for you to spend as you’d like, including using some as savings.
Please download our free Budget Planner page to help you if you would like. This is a very basic budget planner page created to help you get an idea of how to organise your budget.
What are Savings Pots?
Of course you can go more in depth with this and create savings pots for upcoming events, holidays, birthdays or something special you have been eager to buy. Using a saving pot is simple, decide how much you can use from your ‘What’s Left’ pot for each savings pot. You can then have a savings account, some banks have savings pots built into their current accounts, or you could use an actual jar in your home.
The last one is a lovely idea as you can see the money building and that will spur you on to add more to the pot. you could even add your spare change at the end of every day.
We’ve created a basic Savings Pot Planner Page too, which you can download and print. Write on each jar what you are saving for and how much you can add to it each week or month. How long until you reach your goal?
Unforeseen situations occur all the time and it is impossible to plan for them, but you are able to have contingencies and be prepared.
One way is to build up an emergency fund, this is money that you never touch except for an emergency. In our house we have an emergency fund that we have built up over a long time and it now covers our monthly outgoings. If for example we had no income one month, we would be able to use that, giving us breathing space to resolve the issue.
It took a long time to build up that bank of money, it might take you a month or a year to create it. That security is incredibly valuable to my mental health, I know if I fall short I have a back up.
The budget plan also lets you see if you will struggle that month and gives you a chance to fix the problem before it occurs.
Tips to Reduce Financial Stress
- Only spend what you have and what you can afford
- Use direct debits and standing orders to automate your bill paying. The anxiety that build up when you need to go online or ring to pay a bill, can be massive. Make things easier on yourself.
- Direct debits can also reduce your bills with some companies, you may receive a small discount for setting one up.
- Know when your deals are coming to an end for your phone, TV, streaming services and ask for new ones. It never hurts to shop around and see if there is a better deal.
- Having a budget plan quickly becomes habbit. It becomes part of your routine and means eventually you know you have £50 or £100 spare to spend on treats and fun things.
- Saving Pots are great to help you see progress and work towards something amazing, whether that’s being debt free, going on holiday or buying something you have desired from afar!
Remember if you are struggling financially there is help out there. You can contact Citizen’s Advice, who will have a local office in your area. They are fantastic and can assist you with budgets, where to get extra help and deal with debts. You can also speak to your GP who may be able to refer you to counselling if money is becoming a worry that you aren’t coping with.