Last week’s podcast episode we talked about some of the psychology around managing your money mindset and in today’s episode I will share more about budgeting and fixed outgoings, which I call the essential outgoings. Knowing what your outgoings are helps you to understand how to pay for your fixed outgoings every month and assess how much money you can set aside to pay yourself.
So how do you do it? Below are some suggestions to help you.
- List all your outgoings. Fixed outgoings or the essential outgoings are the things that you just know are gonna go out each month either on standing order, or by direct debit. These can be your spending on gas, electricity, water, landline board, brand internet, car insurance, tech road tax, mortgage life insurance, unemployment cover, health insurance, bills, insurance contracts, insurance, pension loans, mobile phone, TV package, pet insurance, glasses, contacts, gym, car repairs, overdraft charges, credit cards, childcare costs.
- Write the date down when you think they’re renewable. So you can then review the outgoings and know when they’re due. This will enable you to look at anything that’s coming up that you could help with where you can save some money.
- Create your budget planner. Start to segregate things into sections.
- And then, at the end of the month, you compare the costs of actually what you budgeted to what you actually spent.
We all have bad habits, but what’s important is to be more conscious of them and know how not to set ourselves up for failure. So, by having the list of all the outgoings, you’ve got a clearer idea of what you’ve got going out.
If you’re not living your life or not doing the things you want to do, such as going on holiday, then you need to know exactly how you can pay yourself more to enable those things to happen. What I then do is I then keep a running total, especially on my business, but also on my personal finances, so I can see what I’ve got left to spare. I separate my money for my fixed outgoings and then I pay myself with what I call a “spending money budget”. I keep an eye on my bank account to make sure that the direct debits are correct each month and I do this on a regular basis.
In business, perhaps you are someone who gets large sums. If you are living like you got a couple of months back up, but you’re otherwise living from cash flow to cash flow, month by month and you’ve got a certain amount coming in, then knowing what your outgoings are helps you to understand what you can pay yourself.
Another way is to take all the money out as cash and buy everything in cash, which is becoming less and less popular for people to do, and less and less popular for systems and banks to do. If you’re not putting cash out and putting it into envelopes, which is like the old school way, you can physically do that with bank accounts. So you can ask your bank to open extra bank accounts, and separate the money out.
If you haven’t got a spreadsheet and you want a budget planner, just email me “BUDGET PLANNER” at firstname.lastname@example.org. My wealth accelerator planner is available on Amazon. It has a whole year planner which comes with free training too.
If you want to read more about this and you want to know more about it, then you can check out a chapter called “The Money Makeover program” inside my book called The 10 Ways To Accelerate Your Wealth.
If you can make small steps to get ahead, then that is the best place to be in terms of either putting a little bit aside when you have spare money and not just spending it so that you can start to get into a rhythm.
Listen to the full podcast here