A correctly created budget plan is such a powerful tool – it helps you determine if you spend more than you earn and plan accordingly for all set events like birthdays or holidays throughout the year.

Any overspending no matter how big or small leads to debt, but once you plan in advance for all possibilities, you will be able to allocate your money appropriately and stick to your means.

Where do you start with a budget plan?

My advice is to budget for the whole year. I know it may sound overwhelming at the beginning, but I promise you it makes perfect sense. If you look at a “typical month” spend you will probably not account for a morning coffee, weekly food shopping, holiday or car maintenance costs. It may not sound like a lot of expense, but soon it accumulates and it makes your plan unrealistic.

Yearly expenses.

By planning for the whole year you account for your monthly expenses, but also you give yourself enough time to collect money for your bigger yearly expenses and save for unexpected situations. It is more realistic and reachable.

Once you know your costs that will occur next year, you can “allocate” them to months they will appear and plan backward. Do you need to save for these occasions larger sums of money? If so, it may be reasonable to give yourself more time, rather than just hoping to cover them from one salary.

Monthly costs.

The best step to examine your monthly outgoings is to look through your bank account statements. They will give you honest facts about your recent spendings, rather than just your underestimated guess.

Your budget plan needs to include all your regular expenses like accommodation and bills, but also the less regular ones that didn’t even make it to your bank account. Instead, you probably put them on your credit card, so make sure to go through these too.

Monthly and yearly together.

Once you know your real numbers, combine them together and note how often they reappear. Are they happening every month? Should you save for some of them in advance? Could you avoid the impulse and one-off buys? Be honest with yourself and under no circumstances underestimate the numbers that speak volumes.

Allow in your budget plan for savings.

Save, save and save again. Did you hear about “paying yourself first”? You can do it by allocating money to your pension, savings account or choose an investment option. The point I am trying to make is that you should always have something to fall back on in case of emergency. It is also mentally rewarding and allows you to move past your money blocks.

Track your current spendings.

Once you know what you should be spending each month, you should regularly record what you spend. Make sure to compare your ambitious budget plan with the factual spend.

Are you overspending? Or are you well within your budget and have additional money to save or invest?

Stick to your budgetΒ plan, however hard it may sound, it will be worth it.


Good luck!! Make sure to check 6 ways you sabotage yourself and how to stop it! and let me know your thoughts on the subject of money.

P.S. Let’s stay in touch! (follow the link)

Weronika x

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