Budgeting: 5 key tips to help create a realistic monthly budget in 2022 – expert advice

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January can often be a time where many people opt to make changes in their life to help kick-start their year. Indeed, a common New Year’s resolution is to save money with a specific end goal in mind. Whether it be saving up for a house deposit or a holiday abroad, budgeting can help you to meet your target. However, it can often be a struggle to keep to your commitment – so what’s the best advice to help you create a practical monthly budget in 2022?

Makala Green is a chartered financial expert who has a wealth of experience in addressing personal finances.

She believes that although budgeting can appear a “mammoth task” at first, it will help you eventually achieve your financial goals.

Speaking to Express.co.uk she revealed her best advice for anyone who’s looking to create a realistic monthly budget in the New Year.

1.) Don’t let excuses get in the way

One of the first obstacles many people encounter with budgeting is not allowing excuses to deter them from getting started.

To avoid this, Ms Green says you need to simply “do away with the myth” you don’t have enough free time to put aside and focus on your finances.

She said: “Sometimes it’s difficult to do that New Year spring clean and it’s difficult to get back to work, but once you’ve set yourself up with a budget it’s so much easier to manage.

“Once that’s been done all that remains is to make minor changes as and when needed. So, it’s more the start-up than anything else.”

2.) Get yourself a spreadsheet

Ms Green says she loves nothing more than working her finances out using a good old-fashioned spreadsheet as this way “nothing gets missed”.

Here, once you’ve gone through your most recent bank statements, you can accurately work out where your money is going.

Furthermore, you’ll also be able to understand how much money you’re exactly spending on what Ms Green labels as your “enjoyable expenses”, such as socialising.

For anyone who genuinely doesn’t have enough time to sit down and go through their accounts, she recommends that people make use of any recommended accounting apps.

Through API integrated systems – software which enables interaction between data, applications, and devices – these will draw all of your expenses from available bank statements and allocate them into categories for you.

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3.) Separate your accounts

Ms Green emphasised the importance that creating separate bank accounts can have in helping you keep track of your finances.

She said: “I think if you want to give yourself a bit of an easier time, it’s worthwhile having a separate account for things that are your enjoyable expenses.

“So, you would have one account for your fixed expenses and another kept separate for your enjoyable expenses.

“That way it’s very clear that whatever you’re spending in there is okay and it also ensures that all your bills are paid on time as well.”

4.) Create a specific goal

Giving yourself a specific goal to work towards rather than a vague target can help you maintain focus and motivation.

Ms Green says “the more defined you are about your goals the better” as you’re less likely to break away from a commitment.

5.) Allocate money for emergencies

Life can often throw up unexpected challenges that require people to compensate for and thus veer away from their financial goals altogether.

To help avoid falling into this trap, Ms Green advises people to put aside a certain amount of money each month to cover for emergency funds.

She said: “Each month you can try and build up a pot so that if you do have any unexpected expenses you can always go into your savings pot rather than affecting your budget.”

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