How to Set a Realistic Budget

Budgeting can be really hard. It can be hard enough to stick to a budget but if you do not set a realistic one to start with then you will struggle to stick to it. It can be tricky to know exactly what to set and how to set it up.

Look back at finances

To start with you will need to look back at your finances to see what your status normally is. You need to note down to start with the money that you have coming in. This is money from salaries or wages, benefits, interest, pensions and any other source of income. This should only be regular amounts that you expect to keep getting rather than ad hoc amounts you might get from bonuses, birthday presents, selling items or things like that. Then you need to note what you spend on necessary items. These are things you have commitments to or you cannot go without such as food, travel to work, basic clothing, utility bills, loan repayments, rent or mortgage, taxes, contracts and things like that. Then you will be in a position to work out whether you can afford everything that you have to buy. If you cannot then you will need to start working out how you can reduce the costs of those necessities (by comparing prices and switching or downsizing) as well as how you can earn more. The budgeting exercise will actually have to change to just be a way to cover basic needs.

Most people will be able to cover the necessary items though and it will be luxuries that they will then need to examine. Make a note of the things you like to spend money on such as entertainment and going out, new technology, hobbies, holidays, charity donations, gifts and things like this.

Predict future spending and earnings

It is good to then think about the future and what might change with regards to spending. In the short term not much may change perhaps but maybe in the future interest rates may rise so the cost of borrowing may go up, you may have children so that will cost more, you might feel there is a chance you will lose your job or you might be expecting a promotion. It is good to think about the different possibilities as you may need to make allowances for that. It is not always that easy to make predictions like this but it is worth having a think about it so that you are well prepared.

Allow some extra

It is always good to allow a bit of extra money just in case. You never know when you might get an unexpected bill, a white good will break down or you need your car repaired. It is wise to put a bit of money in a savings account each month so that you have some spare to help you out when you need it. So, it could be wise, as part of your budget to have a direct debit each month to transfer money into your savings account just after you get paid. Add this into your budget and it should be easy to get it done.

Budget sorted

Once you have all this you can properly budget. You will know what you need to spend on necessary items and what you save. You will then know what you have left to treat yourself. However, you will need to be flexible. Things will change from time to time. Prices may go up but salaries may not and this could mean that you will need to change how much you allow for buying things and you may have to reduce what you are spending on treats. Try hard not to reduce the amount you are saving and try to only spend that money you are saving for emergencies. It can be there to help you out so that you do not have to borrow money when you suddenly need some.

It can sound tricky, especially if you enjoy treating yourself to things. However, if you make sure that you always have enough money to cover the essentials then you can feel more confident that you will be able to cope. It can make you feel more relaxed about managing the money that you have. If you buy less treats for yourself then it can feel like you are spoiling yourself more. This may sound odd, but knowing that you have been careful with your spending and you are only buying a few treats can make you look forward more to that treat. You may then feel that it is more of a treat and you may pick more carefully what it is you are treating yourself to. As you may have to wait longer for things it might feel more special as well. Sometimes just being able to buy whatever we like does not feel so much like we are spoiling ourselves as it is just something we always do. Thinking harder about what we want and perhaps saving up for things can feel more satisfactory.

How to get Low Price Home Insurance

Most of us need home insurance of some sort. This can be for just the contents of the home if we are renting or for the buildings and contents if we own the house. These can be quite expensive but there are ways to get cheaper insurance. It is worth examining these things as it could make quite a big difference.

Compare insurers

The easiest thing to do is to compare different insurers and make sure that you are not paying more than necessary. There are different ways that you can do this. Comparison websites is the most obvious way and you will find that there are lots of these that you can choose from. You might even find that some offer you incentives if you use them. However, you need to be careful as some comparison websites will not include every insurer. This is for several reasons. Some insurers never appear on them, because they only deal directly with customers and so if you want quotes form them you will have to approach them directly. Others will not pay commission or not very much commission to comparison websites for leads that they generate. This means that they may not bother featuring these insurers at all. There are some sites, such as Money Saving Expert that do list all insurers regardless of the commission that they get though, so it could be worth looking there. Even if you decide not to trust a comparison website, it can still give you an idea of what insurers are available and you can use it alongside your own research to see whether you are paying more than necessary.

Put in safety measures

It is sometimes possible to reduce your insurance by improving the security in your home. This will depend on the insurer though as some will see a house alarm as a sign that you feel concerned you will be burgled and mark it down as a higher risk rather than something that will reduce your insurance. Therefore, check with your insurer. Things like doors and windows with good locks and possibly a CCTV camera could also help, but do check to see whether the insurance will reduce in cost and if it does whether it will reduce enough to justify the cost of these measures.

Insure expensive items separately

If you have certain items that are of extra value then it might be cheaper to insure them on their own insurance policy rather than using the general home insurance. This may not always be the case but it is worth checking whether you can save money this way. Get some quotes and you will be able to work out which will be the cheapest option for you. If you have items that you use outside of the home, such as electronics then these might be the sort of thing that could be cheaper to insure separately.

Do not make too many claims

Every time we make a claim on our insurance the premium will go up. This is because the insurer will see us as a greater risk to insure as they figure that one claim could lead to another. This means that it is wise to carefully calculate whether it is worth making a claim, especially for smaller items. If you have just a small amount of damage that you need to claim for, then it could be better to not make the claim and pay for it yourself as the increase in premiums over the following months and years could make it really expensive. It could even be worth making the excess really high and that will not only make the premiums lower but mean that you will not be able to make a low value claim.

Pay yearly

With some insurers you will be able to pay a lot less if you pay yearly. They often offer a monthly payment option but they will charge interest on it in the same way that they do a short term loan. This will mean that they make extra money from customers who pay monthly. Not all insurers do this, but many do and it is worth finding out whether you can get a monthly premium which is not dearer or considering paying a lump sum each year instead. You may have to save up money to be able to afford this so it could take some careful planning. You may need to start saving right away and put some money away each month so that you have enough when you need it.

It can be really easy to just stay with the same insurer all of the time and many people do. They might trust the company or just feel that it is not worth changing. However, take a look at what you might be able to save and you could change your mind. It does not take very long to compare prices and you will find that it will be worth it as you could save a significant amount of money either each month or each year.