When budgeting with friends, for many people who have the goal to get out of debt, creating a budget (or Spending Plan as I like to call it) sounds simple balance your income against your expenses, listing all the debts you owe and who to, basically spend less than you earn and pay of the highest-interest debts first.
The problem is there are a lot of people who don’t know how to go about a budget and that’s where the good intentions go out the window.
The budget for some people is basically money in and money out therefore they are not giving up Friday night drinks.
However budgeting with friends can be so much more, the first step is to remove the stigma that you have to “give up” or “cut back” on your lifestyle in order to have an effective budget and be debt free.
Budgeting with Friends
Being in debt and not knowing about budgeting with friends is not an exclusive club, millions of us are living payday to payday, with no budget in place to guide our spending more often than not people are spending everything they earn, some more than they earn through credit cards and personal loans in some instances.
Having a budget in place, weather it’s weekly, fortnightly or monthly can take you from being in debt to having savings, make sure to include, so you not taken by surprise, any expenses that occur quarterly, half-yearly or annually.
With a little help from your friends or an adviser you could gain a better perspective of your expenses, having someone check over your budget, your bank statements, credit report, not only eliminates overlooked or forgotten debts and expenses, but what about things you didn’t even realise you were still paying for like subscriptions.
Change your Lifestyle
A friend of mine suggested changing service providers when she saw how much I was paying for our phones and internet, it can save you so much money that you could use to pay down debt.
It’s about having positive constraints on your lifestyle so I suggest when considering who to help you, ask yourself if they are going to hinder or help you?
It’s important to keep in mind when you are creating a budget that there are alternative ways to still do things you enjoy while getting out of debt as well.
For example, we are a bit of a foodie family and instead of spending $100 per week on takeaways we budgeted $150 for the month and made it out date night, and the money we saved went towards paying down our debt….win win if you ask me!
It’s about making lifestyle choices, by making better decisions about what we are willing to spend money on and if you are prepared to make them you’re on the path to being out of debt. .
If you have set up your budget, every dollar is accounted for but it’s not quite enough and there is no more income to be seen, you need to consider adding other sources of income.
There is more week left at the end of my pay
This would be me when I was at the start of my road to ditching my debt, some weeks what I earnt wasn’t enough and I had to work an extra job, it was hard but eventually the decrease in my debt meant I could go back to one job.
There are so many options, you might have a skill you can sell, or a hobby making something that you could sell at the markets, whatever you can do means more money for the budget.
Creating a working budget is the first step in financial freedom, and empowers you to take control of your money.