In his latest column for Altrincham Today, Jason Moss, an Altrincham-based Independent Financial Adviser at Harvest Associates, discusses the importance of managing your household expenditure
If you don’t know what your typical household expenditure is, you’re not alone! It is however one of the most important things to be aware of when planning for your future.
How can you know how much you can afford to save or invest when you don’t know what your expenditure is? It’s all the more important in a cost of living crisis.
Take time to sit down as a household and go through your bank and credit card statements to understand how much your lifestyle actually costs.
It’s often easy to put off household administrative tasks like this. Put some music on and grab a coffee (or even a glass of wine!) to help you through the process.
To have a clear sight of all your spending you need to account for everything: utilities, food, holidays and subscriptions, it all costs money! Include any cash withdrawals that may cover social or discretionary spend and remember annual costs that may not show in a particular month, you may find it useful looking back across several statements.
Once you have worked out what your monthly expenditure is, subtract it from your household income (the figure paid into your account after tax). This should give you a snapshot of your surplus income.
Two important tips for all my clients prior to advising them further:
- Make sure you have an emergency fund. This may not be exciting, but earmark six months’ worth of your household expenditure in an easy access cash account to cover any unforeseen expenses, such as the car or boiler breaking down or the roof suddenly needing unexpected repairs. This should provide you with peace of mind and great satisfaction when said unforeseen cost arises!
- Large foreseeable expenses. If you have planned expenditure on the horizon (within the next few years) outside of regular expenditure, ensure you have cash aside for this or start saving towards this. This could be for a wedding, house purchase or holiday of a lifetime.
If you wish to discuss creating a financial plan, investing any surplus income and/or your pensions, please get in touch.
Alternatively, struggling to budget? Get in contact if you would like a free table to help you understand what your expenditure looks like.
If there are any questions or topics you would like him to cover in a future column, he would love to hear from you.
Harvest Associates is authorised and regulated by the Financial Conduct Authority. FCA registered number is 629749. The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.