HOW TO CREATE A BUDGET FOR THE YEAR, AND WHY YOU NEED TO.

Thursday, 16 December 2021

I love creating budget spreadsheets and savings vaults on Revolut. Whether I always stick to them is another thing, but at least the intention is there! As we get older you’ve probably realised that there are suddenly a lot more things to pay for, and your take home salary isn’t the same as soon as you start paying things like your pension and life insurance etc. Here is why creating a budget is important and some tips for how to create one and stay on track of your finances.



Why create a budget?


For the simple reason, that nobody likes to be struggling with money. We also know life is full of unexpected costs and it’s better to be prepared than have debts to pay left right and centre. It’s important to live within your means and to understand the difference between wanting and needing something. To learn more about creating the perfect budget and why you need to, click here.


How to start a budget


Create a spreadsheet


It doesn’t have to be complicated and full of formulas, but the ‘equal sum’ one will come in handy and means you won’t have to manually add up figures or whip out your phone calculator. The way I organise mine is having a table for each month and keep my total income at the top and another row for money I might have coming in from my blog. I then list all my fixed spendings such as my pension and the gym, and then I can see what’s left to arrange into savings or disposable income for the month.

Have multiple savings accounts


Any kind of savings is always great (and better than being in debt). I have 3 savings accounts opened in Natwest just so I don’t feel guilty if I pull from my savings for a treat or a holiday for example. My first savings account is dedicated to furnishing my house when it’s eventually ready, and this I hope to not touch until then. Especially when I’m getting 1.5% interest with Natwest Savings Builder. My second savings account is for ‘fun stuff’ like holidays and festival tickets. My third being ‘adult stuff’ like dental appointments and unexpected expenses.

Pay yourself first


It can be easy to spend as you like and then put away ‘whatever’s left’ at the end of the month, but doing that makes it very easy to be left with nothing and just living from paycheck to paycheck. When your salary comes in, pay everything you need to and save and then see what you have left for the month. I usually move my monthly disposable income to Revolut and keep that as my budget for the month.

Plan ahead


December ends up being an expensive month for everyone with all the Christmas shopping and social gatherings, but it doesn’t have to leave you scraping pennies and using up half of your next salary by the end of the month. What I did at the beginning of January is I calculated all the birthday and Christmas presents I had to make this year and then I divided that sum by 12. I then set up a recurring transfer to a ‘Presents Vault’ on Revolut each month so that I had the money saved already. I can say that’s definitely helped!


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* This is a collaborative post but all words and opinions are my own *

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