The start of a new year is the ideal time to get an overview of your household’s finances. Budget planning is an important part of this. With our simple tips, you can set up your budget, manage it and make changes to it where necessary. So how does it work? You deduct all of your expenses from your income and note down whatever’s left. If you have a lot going on at the moment, you can do your budget planning a bit later. It’s well worth it.
Budget planning is the basis for comprehensive financial planning. This way, you know how much money you have available for saving, retirement planning and, if need be, investing.
We give you easy-to-understand advice for your financial planning.
If January leaves a hole in your wallet, you know it’s time to take a closer look at your finances (again). A budget plan is the ideal tool for this. If you don’t have one, you can easily set one up in four steps. Otherwise, January is the ideal time to check through your budget. Use this opportunity to reflect on the previous year and plan your finances for the coming year. This allows you to adjust your budget to changes that arise due, for example, to a salary increase. In addition, set new targets for your yearly savings, retirement planning and investments so that you can plan larger expenses, such as holidays or other major purchases.
It’s actually quite simple: you have income and expenses. The only way you will have money left over to save up for something you want or to make an attractive investment is by earning more than you spend. Bet let’s be honest: we can’t just save money for our hopes and dreams. It’s important to have reserves so that we are prepared for any unforeseen expenses, are able to pay our taxes and can provide for our retirement in the long term.
With a budget plan, you can get an overview of your household’s finances and find out where you are spending money unnecessarily, as well as where you could perhaps save a bit more money.
Many people quickly lose track when planning a budget, but drawing up a budget plan isn’t difficult at all. Here’s how it works in five easy steps.
Before making a start on the specific breakdown, the first step is to pay attention to these three basic ground rules on how to structure your budget.
You can download an Excel template from the Internet, make your own Excel table or use a budget app. Whatever you choose to help you plan your budget, the important thing is that it works for you.
It’s especially easy to set your own personalized budget with our online budget planner.
Income: you can find information about your income in your salary statements or on your most recent tax return. Your income is made up of your salary or your pension. You might receive additional income in the form of state subsidies, interest and investment earnings, rental income payments or any other regular income.
Expenses: make sure you take into account monthly, yearly, half-yearly and quarterly costs. This includes your insurance premiums, the Half-Fare Travelcard and taxes. Check your account statements and credit card bills to do this. When planning your budget, also think about fixed costs that do not occur on a monthly basis – such as servicing your car, medical appointments and holidays. Work out how much you should put aside each month for these.
If this produces a negative figure, check your expenses again for any potential savings and recalculate the amount. You will find a few helpful pointers in the article “Unnecessary expenses that you can keep under control with a budget”. You can only build up reserves, provide for unforeseen events (e.g. fines, accidents, family emergencies) and save up for the things you want if you have money left over.
Do you want to take the opportunity to set up your own budget plan, but aren’t sure what should go into it?
As already stated, January is a good time to look through your budget. It’s also a good idea following a major life event, such as changing job, moving house or the birth of your child. These events affect your finances.
You may have heard of top-down budgets from the business world: this is a budgeting method in which management centrally determines the whole budget and then breaks it down into departments and projects. It works as follows when translating into a household context:
In this way, you set yourself a total budget showing monthly or yearly expenditure that you can then break down into different categories.
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