When it comes to budgeting, many people believe that frugality is the only way forward and whilst cutting costs is very helpful, it can only go so far it can take you without tracking your money. With the number of people who have significant credit card debt increasing with every generation, knowing how to budget is something that, surprisingly, not many people do.
Evaluating your Outgoings
The bare bones of budgeting are first of all being very honest with yourself and outlining your incomings and outgoings. Are you a balanced spender and are you prioritising your money in a way that you would truly want to? Even if you are starting with one stream of income, knowing exactly how much you want to save and invest is key. Using card options such as Monzo is an excellent way to start your budgeting journey and keep track of how much you are spending.
In evaluating your outgoings you will be able to give yourself a sense of clarity and understand what budgets you can allocate to what things. Prioritising your needs is vital, such as your bills and living expenses and then choosing how much you can realistically budget to spend and save will come next. This will vary depending on where you live, so ensuring that your budget is truly realistic is vital.
Negotiate your worth
If you are at a stage in your life, where you can offer your skills elsewhere and be paid more money, this is something you should most certainly consider. The working world is constantly changing and if you feel that another role would better serve your financial needs, then you are very much in a position to go for it and increase your income.
On the other hand, if you are in a position to negotiate a higher salary at your current place of work, then you need to be prepared to get the most out of your income and opportunities. By taking a detailed review of your job responsibilities and factoring in how many times you have gone above and beyond them, you can orchestrate a solid pitch to negotiate a pay rise. Go in prepared and don’t be afraid to consider options outside of your current role if you don’t get the pay rise that you want. Being in a position to negotiate your worth is very much an indicator of your next career move and highlights that it's time to negotiate your next steps and factor this into your budget.
When people think about wealth planning the assumption is that you have to have a lot of money to be able to do it, but setting financial goals paired with your budget is king when it comes to managing your income. What do you want your money to do for you? Do you want to invest for your future self or perhaps you are saving for a holiday or house deposit? Whatever your financial goal may be, they need to be factored into your budget and again realistically outlining how much of your income you want to set aside for this financial goal.
Accounting for your wealth planning can come in the form of wanting to manage it yourself or hiring a wealth manager for you. This all comes as a result of sitting down and evaluating your income sources as a start and figuring out if you can manage your money or if you need help to decide what is the best thing for your money to do.
Check-in on your goals
It’s all fair and well setting your financial goals, but checking in and reevaluating them is a must. Your financial requirements and needs will more than likely change over a year, so by setting a date in the diary to sit with your finances and redistribute what money you want to go where you can ensure you’re on top of your budget. Treat your finances in a quarterly fashion and split your calendars into quarters, if your expenses are slightly high in one quarter or you’ve decided that you want to set more aside for a big trip then you can reassign your income accordingly. By using a spreadsheet or budgeting apps you can easily check in on your money and calculate what you are saving where.
Making the most out of your income and handling your finances face on can be daunting if you’re a beginner to it, but by thoroughly learning how to set a budget as well as checking in on your financial goals is key to your financial success. Establishing how much you can save and spend from the get-go will ensure that you can make the most out of your income and in turn your future self will thank you for it.