If you're busy budget planning, getting on top of your spending habits or trying to save for something big, doubtless your mind is awash with figures. But what are the key numbers in your budget? What do you know what you should really be focussing on?
1. Your household income
This number is the most important one of all. What's your household salary after tax and pension contributions? This is your monthly (or annual) income. When you're looking at this number, try to adopt a healthy financial attitude. Rather than thinking, 'I wish I could have that house, this car or nice designer clothes on my income', try to discipline yourself to think: 'what's the best house, nicest car and highest quality clothing my income can buy me right now?'.
2. Your mortgage or rent
Your mortgage or rent is probably your biggest outgoing. The average UK household spends at least a third of their income on their mortgage, and almost half of their income on their rent. Factor in potential increases in interest rates and make sure your income covers the cost of keeping a roof over your head.
3. Your utilities and home-related bills
The next biggest cost (and therefore a key number in your budget) is the amount you spend on your utilities. Count up what you're spending on things like council tax, electricity, gas, water, internet, household insurance and maintenance.
4. Your direct debits
Another key number to factor in is the cost of your household direct debits. This includes things like your TV license, your car insurance, your mobile phone contracts, TV packages, subscriptions and anything else you're signed up for that comes out of your bank account every month. But don't forget to budget for one-off costs such as car MOTs and even little (but costly) things such as new reading glasses and dental work.
5. Your grocery bills
Your monthly grocery bill (including your toiletries and household cleaning items) is another figure you need to work out. Set yourself a target to do your shopping no more than once a month; over the course of a few months, you'll have a clear picture of what your supermarket trips cost you so you'll be able to accurately set a number to aim for when budgeting.
6. Your current debt
Another key number in your budget is your current debt. This could be your credit card loan or repayments on your Logbook loan, and so includes anything you have on finance, such as cars and furniture. You need to account for these figures in your budget and be able to repay them comfortably.
7. Your savings
A budget for those just-in-case occasions is important too. Decide on an amount to save every month and move this number into a separate account as soon as you're paid every month. Just be careful where you put it - some savings accounts restrict access to your money, so be sure you can go without it or opt for an account that's flexible about making withdrawals.
8. Miscellaneous, holidays and celebrations
Finally, give yourself a portion of your income (you can think of it like pocket money, if you like)! so that you're not living from pay cheque to pay cheque. This sum of money will account for new clothes, coffees, meals out, leisure activities, cinema dates and more, as well as bigger celebrations such as birthdays and Christmas spending.