Most people get more mental exercise than they want when it comes to dealing with personal budget issues.
The problems can range from real nuisances to quite genuinely baffling situations where they may be wondering whether they need a financial adviser or an astrologer.
Some things, like home insurance, may be basically simple in themselves, but in combination with other financial issues, can be absolute pests if you don’t know how to manage the combination of expenses.
The basic answer to dealing with personal budget issues is summed up in one word – “Planning.”
The best thing you can do for your personal budget is to get ahead of the problems.
It is possible to avoid problems entirely simply by navigating around the irritating issues and creating a working cost base oriented to essentials.
It’s ironic that quite a lot of problems people have with their personal budgets aren’t really the result of lack of care or extravagance. They’re much more likely to be the result is simply not understanding some of the issues involved in budget spending, or miscalculation.
Personal budgets can be complex, and unless you’re living in a cave, learning to manage budgets can be quite an ordeal.
Personal budget basics
The only real way to manage the personal budget is to lock down expenses:
- You really do need to plan your expenses in advance, and as far as possible stick to the budget.
- Saving a bit of money wherever possible is also a good way of making sure that your budget isn’t going to fall to pieces on you.
- If at all possible, try and pay unavoidable and essential expenses in advance, preferably including a discount if you can.
- Put aside a little money around for spending and just having fun. This is also useful if you find something you really like that might trash the budget.
- Look for better deals, always. Whatever you buy, whatever you’re paying for, it usually is possible to get things cheaper with a bit of effort.
- Save unnecessary fees paid on financial transactions. Moved overseas and transfer money to India? Look for the best deals for sending money to India and you could save as much as 5% on every single transfer.
- Keep credit card spending firmly under control. Credit cards can be like financial ulcers, needing attention all the time and costing you money, usually at the times when you don’t want to be spending anything. Read: 8 mistakes to avoid when using a credit card
- Always try to get the best value out of your spending. Bulk buying, buying quality things that will last a long time and similar buying patterns all add up to considerable savings over time.
Dodging the minefield
As you can see, there’s a pattern in personal budgeting!
The idea is that all your spending, saving and budgeting is properly integrated. That way you don’t get surprised by expenses, which is the real minefield zone.
It’s easy enough to dodge spending by anticipating situations and making provisions in advance and create spare resources. The likely difficulties are when sudden expenses arise, and you do have to be prepared for those.
Savings and squirrelling away can provide a useful buffer which prevents the live budget going off the rails. Think of these savings as your personal budget’s “contents insurance.”