The 3B’s of Balancing your Finances

To kick the year off well, here is a great way to get your finances in order. This is the 3 B’s, being your Budget, Borrowings and Backstop! Get the three right and you can enjoy a much more relaxing time when it comes to money.

Budget is generally a bad word to most as they are so hard to keep. There are tricks to it.

Download the last six months bank statements into a spreadsheet. This allows for seasonal or one off issues. Then put each type of expenditure in its own column. Now divide by 6 and that’s your monthly average for each type of expense – rates, power, phones, car running etc.

Next, go through each one and see if you can cut back. E.g. contact your phone, internet and power suppliers and ask for savings or better plan ideas.

Next, see what you spent on food and your personal spending (alcohol, coffees, lunches, groceries, the kids) and take this out weekly in cash. This way you can’t overspend. This is a very powerful method of staying to budget!

Borrowings are the next ‘B’. List all of your debts, credit cards, HPs, mortgage, personal loans etc. List them from smallest to biggest. Ignore interest rates. Now make a plan to pay them off in order of size. It feels so much better when you finish each one. If there are a few and you’re not happy with how to do this, call me. I can talk to you about managing your total debt.

Backstop is the last one and this relates to a backup plan in case of disasters. It’s a good idea to have a small amount tucked away for emergencies such as the dentist and car repairs. The other and more critical part of any backstop is insurance. House, contents, car, life and disability cover are all extremely important as things WILL go wrong that are outside of your control. The trick with these is to review them regularly as circumstances change and you may no longer have the right ones.

In summary… get the 3 B’s right and stress reduces and you enjoy life more. But all three need regular reviews, particularly after Christmas as that is the most costly time of the year. We can help with this.