How to do your personal budget is this week’s I Hate Numbers podcast topic

Worried about your personal finances?

How to do your personal budget is the answer! It will help you keep track of where your money is going and how to make the most of it.

With a budget in place, you’ll have more control over your life and less anxiety about the future. You’ll know where you stand financially and be able to make better decisions about your money. Start budgeting today with our easy guide!

If you're like many people, you may not have a firm grip on your personal budget. You may feel like you're constantly struggling to make ends meet, or that you can't seem to save any money. But it doesn't have to be this way! There are plenty of simple techniques and strategies that you can use to get your finances in order. In this podcast, I'll teach you how to do your personal budget.

So whether you're looking to get out of debt or just want a little more financial stability, read on for tips and advice!

When it comes to personal budgeting, there are several key benefits that can improve your overall finances and wellbeing.

Conclusion

So, if you're feeling lost and uncertain about your personal finances, don't worry, you're not alone. But there is help out there. And the first step is to understand that money isn't everything. It's just a tool. Once you have that mindset, then it's time to get serious about dealing with your debt and creating your personal budget that works for you.

Subscribe so you don't miss an episode where we'll be delving even deeper into these topics and giving you concrete steps on how to take control of your life and your money.

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You can make more profits, save tax and time, improve your well-being and your money mindset.

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There is a link and a correlation between your personal well being and how you handle money and money and how that impacts on your personal well being. One device, one method of grabbing hold of your life, to give you more direction, to give you more control over your personal finances, lessen the anxiety, and give you more certainty and clarity, is to deal with that magic B word. And that B word is budgeting. In this podcast, I'm going to be looking at budgeting in your personal household, how you go about constructing one, the things you should think about, and actually using that personal budget once you've got it, once you've constructed it, and once you've made it.

You're listening to the I Hate Numbers podcast with Mahmood Reza. The I Hate Numbers Podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Hi, folks. Welcome to another weekly episode of I Hate Numbers, the podcast that has got a mission to improve your financial awareness, up your money mindset, help you and your business make more profit, save tax and save time. Pretty good mission statement, if I say so myself. Let's crack on with the podcast. Now, personal budget, when people think of it, they immediately think of a straitjacket, something that can strain your life, something that's more about restricting and do nots, as opposed to what it is, is your personal financial story as you write it, but actually translated into numbers.

So how do we go about constructing our personal budget? Well, the first thing we need to do is to think about what's going on, what's our story, what are we planning to do, what's our goals and aspirations? So do we have anything that we're aiming for over the next twelve months? Are we saving up for a deposit, for some new furniture? Do we want to buy some replacement items for the house? Are we looking in terms of putting that towards some saving a holiday, some luxury? What's the pattern of our life going to be? And what we need to do then is to actually think about it in narrative terms before we actually get bogged down with the numbers.

Now, in terms of getting moving on this one here, we've got to think about where that money is going right now, where that money goes on a regular basis, and where that money is like to go in the future. And remember, it's not set in stone. It's not a static piece of work we're doing. It's ever evolving and ever moving forward. In terms of the money, where does it go, we can either rely on our memories of what's in between our ears, our worst office in the world, or we can actually try and adopt a more structured approach to doing these things. And when it comes to where things go. I want to take the concept of looking at things in groups.

And by the way of analogy, just imagine you're in a supermarket. Now, a supermarket has got thousands and thousands of product lines. What it does, if it wishes to understand what's going on with its products, it will group them according to certain categories and certain definitions. So, for example, it may have a category of dairy products within which we will have lots of different lines for cheese, eggs and milk within food and drink, which could be another category. We may think of the drinks side of things here and we can break that down into wines and spirits. And within that we could break that down into finer detail. If we adopt that and apply that to our personal finances, we may think of our expenditure in terms of groups. So there's household running costs. Typical inclusions in that group would be rent or mortgage, utility bills, local property taxes, such as council tax.

We could then think in terms of transportation. Transportation could be the cost of running your car, if you have one, your bicycle, your train tickets, your bus fares and the like. Think about what you do in terms of your commute to work. And if you don't commute to work, what about when you're actually using some form of transportation to go visit friends, family or just to pop down to the shops? We then think of that horrible thing of debt. All of us will be considering that debt. And you may look at it in terms of credit cards. You may think of it of personal loans that you've got outstanding. You may think of it in terms of credit cards as well.

So whatever we do, think about buckets and think about groups and categories in which we can then group and individually allocate individual items to spend. If you're thinking, my brain has gone to a bit of a freeze, I can't quite think of any groups, check out the show notes, folks, and I'll give you a link to a table of some suggested groupings that you can adopt. Now, having decided what our groups are, having then identified what belongs into those groups. And remember, at this stage, leave the calculator alone. Don't do any number crunching. Don't think I can or cannot do this.

Write your groups, write the most items, go away, have a rest bite, come back after you supercharge yourself with a cup of coffee. I would avoid doing anything stronger until we've actually got to the end of the process. Now, we then need to try and translate those items into some degree of frequency. Are these items that are spent on a regular monthly basis? So if we're thinking of the household running costs, rent is something typically that's paid once a month. If you own your own property and you've got a mortgage, that mortgage is going to be leaving your bank account on a monthly basis.

If you've got debts such as credit card, again, those might be regular monthly payments. And remember, at this stage, we still don't put any numbers here. We're just thinking about the frequency, how often these things leave our account. If we're looking at money that we have to put down for a holiday, you know, that deposit that may be made once in the year and then the balance of the holiday will be paid later on. Remember, this budget we are doing is reflecting where you see yourself, your targets, your goals for you and your family.

There may be things such as utility bills that you may be billed quarterly. So, think about what's going on and if you're thinking well, Mahmood, I'm not quite sure these are on figures that I carry around in my own head, then it doesn't matter at this stage of the game because there is lots of documentation we can dive into to help put some numbers to there and identify what's going on. Now, having got some idea what's going on, and if you want to really reinforce that listing, that grouping, that story we're putting together, then grab your bank statements. If they're digital, great. Log on, have a look at them online. Personal preference? I prefer hard copies, but that's a lot of paper to be playing through.

Get your credit card statements and just read it through. There you may find that there are certain items on there you don't recognise. There may be some very strange names given to them. The name itself is a good thing to dive deeper and to find out what's going on. Many people that I know that I help with planning will find that when they examine and interrogate their bank statement, when they look through their credit card statements here, there are items there they weren't even aware that are actually being paid for in the first place.

So it can be quite revealing. It could be quite a shock as well as a pleasant surprise. So we then boil the items here. We're doing again, pieces of paper would be good. You can do it in a digital format, do whatever suits your purposes best. Personal preference. I like writing things down, as well as using things such as documentation, spreadsheets and the like. We then put figures next to those items. For those figures, I was just let's not get too anal, let's not get too stuck with this. And we're the nearest £5 precision, whether it's the £1.33 or £1.76, is not going to do a great deal in terms of writing your future financial story.

Having got the list, the groups of items together, identifying what's going on, looks at our bank statements, our credit card statements and other sources of information, we can then see a picture building up now, what is likely to be happening. We may be identifying items that we may think actually do they have any impact in a positive way in my life. We're not doing a complete slash and burn, but you may look at these things and think, okay, does that suit my lifestyle? Is that what I want? Do I need to tighten my belt as such that these costs aren't adding any value on enhancing my personal experience here?

So perhaps I can get rid of these. You can start challenging these numbers. You can start looking for alternatives. You can start looking at changing things. And remember, you're not just looking at the essentials of life, you're looking at the good things in life as well, like leisure activities, going out, dining out and the like. Life is a blend of doing the necessary as well as enjoying yourself as well. Translate all of that, folks, then into a plan, a financial plan that says, based on what's going on, these are the outgoings. And then we've got one last thing to think about. And where does the money come from? Now, for most households, money is likely to come from a number of main sources, such as if you have a job, there will be your salary or your wages, including things such as commissions or bonuses. What we're looking at here is the take home amount, not what it is before stoppages are taken off from your employer.

If you're a freelancer, you're looking in terms of what you're drawing out of the business. If you've got a company, it may be the dividends that you draw out. Other sources of income could be DWP or benefits that you may be receiving, whether for yourself or for your children. If you're caring for somebody, you may receive care as allowance. Wherever that money comes from, ad hoc or otherwise, make sure you factor that into your story. You may be in a situation where you get in gifts from family, from friends, whatever that is. Make sure you factor that in.

And then what we've got is the money coming in, the money going out, and then we can see where the challenges lie. Looking there in front of us then gives a story that we could revisit and edit. There may be times of the year where things become a little bit more pressured, and that gives us the opportunity to think, okay, can we now perhaps challenge those costs? Do we need to spend them? Can we delay them? Can we defer them? Are there different ways to finance them? Are there alternative suppliers out there that can actually replace what we're currently committed to?

Make sure you keep a sense of perspective. Don't get too sucked in here. And what you will find, you will find a reality. And you've got a financial plan that puts you more in control of your life. And all those benefits I mentioned at the beginning will come to the fore. Now, do not leave the document alone. You must come back and revisit it. Keep an eye on a monthly basis, perhaps. This is your accountability framework here and modify accordingly. Once you've got that idea of your personal budget, you'll find that your life and your finances will be supercharged.

Folks, let's just round up what we need to do. Think about your personal story, how it impacts with you and your family. Think about the items, where the money goes. Think in terms of groups. There are specific items within those groups. Think about where the money comes from and then translate those into numbers. Take into account the frequency and how often this occurs. We can then map them in terms of a calendar year, in terms of when the money comes in at a certain time, and when the money goes out.

Check the show knows how, folks for an example of these groupings I refer to. I hope this podcast has given you some insight into how to grab hold of your personal finances and look at budgeting as your friend, as opposed to something you should be wary of. If you found this useful, I'd love it if you could share it with those who might benefit from it. Give me some love, give me some feedback. And until next week, folks, happy personal budgeting.

We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.