Personal Finances | Give Your Personal Finances a Regular MOT by Reviewing Your Budget

Give Your Personal Finances a Regular MOT by Reviewing Your Budget

It is a simple statement of fact that for all of us, even those of us with the most seemingly mundane and predictable of lives, there will be ebbs and flows and ups and downs. And it is important to remember that such change will inevitably affect your personal finances.

Now we all know that it is of great importance to spend less than you earn and to stick to some form of budget in aid of this; organisation and discipline is the key. With this in mind, if our income, outgoings, and general spending habits are prone to change every so often, than it is of great importance to review your budget from time to time to take these changes into account. Doing this is a sure fire way of avoiding such mishaps as getting into debt, missing payments, or finding yourself in a pickle one day because you need access to savings which you don’t have. Consider it something of a personal finance MOT if you will!

 

Your Personal Finances

• Tweak your budget to take into account any changes

The first step here is to quickly check over your budget; and if you don’t already have a budget, make one! A budget should detail exactly where your money is going each month, so you know for example how much you are spending on essential costs such as utility bills, rent/ mortgage payments, transport costs, food shopping, etc, which will in turn allow you to know how much money to allocate to savings and your disposable spending pot each month.

By regularly reviewing your budget every month or so, you will be able to keep on top of any changes to your income, and/or any changes to your expenses, such as over the winter months when your gas and electric bills inevitably rise, or if you are required to increase or decrease your rent/ mortgage payments. On a lighter note, re-jigging your budget to take into account a planned holiday for yourself and your family or any work parties, nights out, birthdays, clothes shopping trips, etc., will save you from finding a gaping hole in your finances at some stage in the future.

Personal Finances

• Keep an eye on your debts and don’t forget to pay on time

Another area you should pay close attention to is the subject of debt. Virtually all of us have credit cards, loans, and overdrafts, and it is important to keep track of where you stand with all of them. If you have a credit card, you should ideally keep under the golden 30% threshold to keep your creditors happy, or at the very least be making payments in excess of the minimum expected payments so that you can pay it off as quickly as possible. Likewise, any overdrafts that you have should be cleared at the earliest opportunities, and loan payments should be met without fail. Lenders, especially the mainstream banks, remain very risk averse following the credit crunch, and any blotches on your credit file, such as a missed payment for example, will be frowned upon. If you have any plans to apply for a mortgage or loan at any point in the near future, they could easily be derailed by something as seemingly insignificant as a missed credit card payment for £10 that you may have forgotten about.