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Author: Internal Customer Services Agent

How to formulate a functional budget plan

It is not entirely uncommon for a vast number of consumers to struggle with their ability to effectively manage their monthly costs. Given the fact that many of us now manage our range of costs associated with everyday life via the means of monthly instalments, it would be fair to say we could be in a position where we are managing several rolling financial commitments at any one time. This could be anything from the cost of your car tax through to the cost of your electricity each and every month and many other things in-between. Generally speaking consumers are becoming increasingly better adapted to this way of life, given the broad spectrum of consumer markets which allow repayments to be made in this specific manner. Whereas in years gone by monthly commitments were typically restricted to purely essential living costs, such as rent and household bills, nowadays these commitments have been greatly increased. This is then coupled by the fact that consumers are able to obtain a vast number of goods by way of a monthly instalment payment. This could mean anything from clothing, games, entertainment and even socialising. A direct result of all of these gradual but consistent increases in the way in which we manage the things we need, and not to mention want, means there is a greater need than ever to ensure we manage our income effectively and with adequate planning.

Without adequate planning and considerate thought, it is not uncommon for consumers to find themselves in a difficult position financially which can then be difficult to move away from. The ability to obtain credit for goods and services means that often the temptation is there when previously this would simply not have been the case. When a consumer finds themselves in a position where their monthly outgoings effectively exceed their monthly income, there will be an immediate and urgent need to ensure action is taken. There are thankfully a number of charity based organisations which exist and offer impartial advice to consumers who are struggling to maintain their existing monthly commitments. Although not all such organisations can deal with potential creditors directly, they will instead offer tools and advice on how savings can be made and effective money management can be used going forward. For any consumers who find themselves in such a position it is key to remain calm and take adequate steps to manage the accounts in existence. This can be as simple as maintaining the channels of communication with existing creditors and providing explanation for how your financial circumstances may have changed. The point ultimately is that there are sources of support and help and communicating in an effective and open manner will assist in making your situation better.

One of the most straight forward and accurate ways of managing your money effectively, and in doing so avoiding the need to seek external support and advice, is through the use of a monthly budgeting plan. For consumers who are paid on a weekly or fortnightly basic this can be broken down accordingly. A budget is a very simple tool which can not only help you plan in advance of upcoming costs but also effectively manage your costs throughout the calendar month. These two points are fundamental in money management and will allow peace of mind that all costs are being looked after by your income as required. Realistically it would be sensible to refresh and update budget plans on a monthly basis as the costs linked to one month may increase or decrease depending on the time of year. Take for example when the cost of an insurance policy is due, or it is a family or friends birthday that given month.

In order to complete an effective budget you will need to be accurate and honest in your listing of monthly costs. This means accounting for all costs which are regular or otherwise. Regular costs are likely to include but will not be exclusive to, rent, household bills, food and travel. Given all that we have discussed it will not be surprising that many of us also have a range of additional costs to account for also. This could be anything from current financial agreements to monthly costs for insurance or road tax. Once all costs, small or large, have been accounted for, it is important to understand the total amount and where these repayments will be made throughout the month. Noting this will help to ensure you understand where and when money will be leaving your account as the month progresses. The final step is to compare the total cost of your expenses to that of your total income. This final step will allow you to clearly understand the amount which is deemed as completely spare and disposable to you in any given month. This disposable income is an incredibly important figure as it will not only allow you to do any additional spending you wish to do, say for leisure, but also keep you informed as to whether any new financial commitments would be suitable and affordable.