Easy peasy planning guide

4-5 easy steps to a financial plan….

I promised last week that I would write a blog on setting a very simple financial plan. Some may call it a budget but I think this word puts people off. When I used to say budget time at work there were groans!.

First step in any financial plan which is really a 2 part step is know your numbers. This works for any plan. A corporate financial forecast, a simple monthly plan to help you manage your money or a long term plan.

1)        What money do you have coming in? Salary, overtime, side hustles, child maintenance. Make a separate line for each different type of income

An astonishing amount of people don’t know how much they get paid or check that it is right

2)        Make a list of expenses – what goes out of your bank or what do you spend money on?

This includes everyday spending on shopping etc. If you don’t know any a logical guess. Here is a list of potential categories.

Mortgage/rent

Gas/electricity

Council tax

Water

Shopping

Phone

Broadband

Gym

Debt repayments

Childrens clubs

House insurance

Car insurance

Fuel

Subscriptions eg amazon music

Eating out

Takeaways

Holidays

Savings

3)        Subtract 2 from 1

If negative you may need to cut down on your spending and could explain why you are in debt. There are plenty of things to do to help you – but this is first great step.

 If the result is zero it means you have exactly the amount of money to cover how you currently live but no wriggle room.

If you have money left over – have a think about what to do with that money – maybe use it towards a money goal, additional pension, emergency fund, sinking funds.

That’s it and how easy it is to make a budget the next steps are sticking to it and amending it.

4)        Track your transactions all month long – have you got the list right?

This is the best way to stick to the plan. No secret it’s that easy.

There are lots of ways to do this – apps, a spreadsheet or pen and paper.

So if you go shopping and spend £100 deduct that from your monthly budget and do this every time you spend.

Do this regularly – maybe once a week or every morning over coffee and it will be come a habit. It takes 5 mins.

As you are doing this make adjustments if you need to.

5)        Make a new one just before the next month begins.

How did you do? Has it helped you to track? Did you get any wrong?

By doing it monthly you can add in things like peoples birthdays so they are not a surprise and you can plan for them. If you don’t have enough to cover it – can you cut back on something else for one month.

So that’s it – it really isn’t hard work – it may take some time to get used to doing it and for it to become a habit but it is the best thing I ever started doing and how I stopped being in debt. A little secret – I still over spend every now and then but by using my budget spreadsheet I can see the impact and then I know I have to go without something the following week or month and I make adjustments.

Good luck – Doing anything of the above is a start

Laura and Nicola x

PS please find a link to our website which has a free financial summary download

https://www.themoneyfriends.co.uk/s-projects-basic