How To Start A Budget Plan From Scratch

Anybody who wants to live an organised and debt-free life needs to have a budget plan. Just think; in the UK, the Chancellor of the Exchequer has a budget and he lives by that budget. Now, if such a financially savvy personality will insist on living on a budget, it is a clear indication that everybody else should get into the healthy habit of budgeting.

The good thing about a budget is that it does not require a template. Practically anybody can start a budget from scratch and keep the budget religiously. The only requirements are self-discipline and common sense. The purpose of the budget is to allocate different sums of money to different needs. A budget also helps the person making it to spend money within certain sensible parameters. It therefore follows that people who make budgets must have an income. This may be a monthly salary or earnings from investments or a business.

There is nothing mysterious about making and keeping a budget plan. Starting a budget plan from scratch can be broken down to a few basic steps. By following these steps judiciously, the person concerned can successfully implement the budget to the letter.

Steps to Create A Budget Plan

1. Write out the budget plan

There is no point in creating an imaginary budget because a budget is not the same thing as creative writing. A budget is usually a written document. This makes it easy to consult and follow the budget. By writing out the budget, it will be easy for the person concerned to know whether he or she is living in accordance with the budget or not.

2. Write out the total monthly income

This is vital because you need to know the exact amount of money that is coming in every month. Based on the total figure, the planner can allocate different sums to different needs and wants. After writing out the total expected figure, the next step would be to allocate different sums of money to outstanding bills, food, transport, groceries and the like. If the budget is not balanced at this point, (and it is not likely to be) the next step would be to edit the budget. This means that some bills may be deferred and some wants can be removed from the list entirely. Now, the budget is making sense already but it needs to be fine tuned some more.

3. Break the budget down into weekly and daily sums

A good budget does not leave anything to chance. Breaking the budget into weekly and daily sums will make it easier to live within the budget. The weekly sum should include food items and other basic necessities. The daily sum indicated in the budget is what the planner will live on every day. This should cover transport costs to and from work and possibly lunch and snacks. On no account should the planner spend more than the sum allocated for the day. In fact, any unspent money should be returned at the end of the day.

A budget cannot be complete without making provision for some savings. Nobody in his or her right mind can spend first and save later. This is a near impossibility. The amount allocated for savings needs to be removed from the total earnings first and placed in the right bank. In this context, an example of a good bank is LloydsTSB. This is a solid financial institution and savings offers from this bank include the Cash ISA Saver, the Two Year Fixed Rate Cash ISA, and the Advantage Saver. Other options include the Monthly Saver, the eSavings Account and the Easy Saver. These savings offers have different interest rates and terms of access so the customers has many options.

As stated already, making a budget is a necessity. The problem is that it is not very easy to live within a budget. With discipline and a bit of help from savings offers from banks, effective budgeting and saving can be done successfully and you will be able to reap the rewards of your efforts in the future.

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