There is a set "norm" for a decent budget that is widely used around the globe. It will apply to most countries. All budgets work on your income, what you actually get paid in your bank account. The formula is as follows:
| Housing (rent or mortgage) | 35% |
| Transport (public, car, petrol, insurance) | 15% |
| Bills & Debt (HP’s, loans, credit cards etc) | 25% |
| Savings | 10% |
| Living Exp (food, clothing, entertainment) | 25% |
It isn’t so difficult to do yourself but you will need to do a bit of maths and if you have a calculator it will make it a whole lot easier. If you can use Excel, Microsoft’s spreadsheet on the computer, this would be ideal. This is the best indicator of what you spend and where you are spending it. Some of you will find that you need to change many things before you are on the right track. But if you do, you will have a better chance of securing a decent future and that is what it is all about. Planning for your future is a big job and some of us don’t start until we have realized our mortality and had children but the sooner you get started on this plan the sooner you will be on your way to financial security.
You need to crunch the numbers now. Let’s do a practical exercise. John gets $500.00 banked into his account on Thursday and the breakdown for this is as follows:
| $500.00 - $ 50.00 | (10%) Savings | = $450.00 |
| $450.00 - $175.00 | (35%) Housing | = $275.00 |
| $275.00 - $ 75.00 | (15%) Transport | = $200.00 |
| $200.00 - $ 75.00 | (15%) Debts | = $125.00 |
| $125.00 - $125.00 | (25%) Living | = $0.00 |
As soon as you start working you should set yourself up with a high interest savings account that you do not touch, this money should always be working for you and is the beginning of your investment portfolio. Over time this will become a significant amount and it is important to realize that this where learning how to save and invest becomes the most important issue. If you buy a car at this point then your wealth has gone again and you are back at the beginning of trying to create wealth. But if you plan to buy a car and keep within your budget to do so and leave your investment in tact then this money is still working for you. You will be creating wealth and you have a financial plan just because you have a savings account and your money is working for you. You will find banks and other financial organizations will lend you money because of this financial record. The other secret is to stick to the budget. You could however take on a second job to increase the income but you still need to stick to the budget. This is the pivotal point that creates the people who make the money work for them instead of people who work for the money. Get all the financial information you can to make yourself financially literate and talk to as many people as you need so that you do know the terminology for what it is that you are trying to achieve. Don’t forget to keep your eyes open for better deals in the banking industry because they keep on coming up, better interest rates, free insurance or other add ons, lower fees etc. These are designed to attract your interest and every now and then it truly pays to change.
