The aim is to plan your monthly budget so that it suits you and your lifestyle.
To prepare an effective budget, you need to make a list of regular sources of income and regular expenditure every month that is as realistic as possible.
This will help you realise where your money is being spent and how much is left after you’ve paid all your bills, such as the telephone, electricity and water bills, and your loan instalments.
This helps not only to save money but also to understand your personal finances, so that you can take decisions on improving them.
Categorise your expenditure
Start by writing down your monthly income such as salary, rents, etc. Then write down the necessary cost of living. This includes necessary expenses, day-to-day expenses and occasional expenses. Your current account statement may help you with this.
Necessary expenses are the monthly instalments you have to pay for:
- accommodation such as your monthly home loan instalment for your main residence or any housing loan for a summer house, or rent.
- other necessary expenses, such as water, electricity and telephone bills.
- income tax, waste disposal charges, professional insurance or social security payments
- insurance premiums for household / car / life / Medicare, etc.
- road tax
- tuition fees for your children, etc.
Some of these expenses may be paid every two months or once a year. In your budget, expenses are calculated on a monthly basis so, for example, if your household insurance costs € 600 a year, write down € 50 a month.
It is important that these expenses are paid without delay. Failure to pay them will have repercussions on your budget.
This list should include anything you spend during the month ranging from the supermarket to petrol. Try to keep a diary recording your expenses every month. This will help you better understand where your greatest outlays are.
Don’t forget to include everything you spend money on. What appears small can be better controlled when you have calculated how much it is actually costing you.
These expenses significantly affect your budget. This category includes money you spend on Christmas or birthday presents for example, or on children’s parties, holidays or clothes.
Set a target to improve your budget
By carefully examining the above figures you can set a target to improve your budget, working out how much you can save from necessary, day-to-day or occasional expenses.
At the same time you could also talk to your personal banker about opening a savings account that will make it easier to achieve that target. We offer various types of savings accounts, one of which is bound to suit you. To learn more about ‘Deposits Multichoices' click here.