Have you ever wondered what the average household budget in the UK was? In 2020, this was estimated to be around £2,548 per month (or £30,571 per annum), based on an average of 2.4 people per single household.

However, people often miss opportunities to optimise their budgets, either by not dealing accurately in pence or pounds or simply failing to recognise key costs.

In this post, we’ll outline the main budgeting costs and look at how they can be managed to boost your personal finances.

 

  • #1. Travel and Transport Costs: Travel and transport cover a broad range of costs, from the daily commute to and from work to leisure trips and fuel for your car. Ultimately, it’s easy to get lost in these variable and complex costs, so it’s important to break these down in further detail to ensure that you have an accurate insight into your finances. This should also prevent you from underestimating the total cost of travel and transport over a typical month.

  • #2. Motoring Costs: On a similar note, the various costs of owning and operating cars can be highly complex. Such costs include insurance, MOT and servicing, alongside completing unscheduled repairs and buying tyres for your car. There are only some costs here that can be accurately accounted for, namely those that are known and scheduled throughout the year (such as your annual MOT). It’s therefore crucial that you focus on what you know and create a financial contingency for unexpected events or repairs.


  • #3. Impulse Spending: According to Finder.com, some 78.4% of Brits regularly make impulse purchases, which are often small and non-essential items of expenditure such as an impromptu coffee or snack. However, the cost of impulse buys can accumulate quickly over the typical week or month, compromising your budget and disposable income over time. So, you’ll need to make an allowance for impulse spending based on your typical activity.


  • #4. Emergency Costs: As we’ve already touched on, some costs associated with motoring or your property are unexpected and cannot be planned for. So, you should be able to build a viable safety net in the form of contingency funds, which can be stored in a separate savings account and only used in an emergency. This way, your monthly budget doesn’t have to be compromised when your car breaks down or the boiler decides to stop working!


  • #5. Treats and Extravagances: Of course, correct budgeting should leave you with a fixed amount of disposable income every week or month. You can break this down how you wish depending on your spending activity, but the money that you’re left with can be used to spend on various treats or extravagances. Depending on your experiences, you can also set this aside as a way of boosting your savings and building towards a long-term spending goal.

 

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