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An excellent household budgeting tip by Nick BurkeWhen preparing the family budget this is a very important consideration to take into account. Once all your non-controllable costs have been calculated and subsequently subtracted from the household income, by non controllable costs I mean the mortgage, credit card bills, loan repayments etc i.e. these set amounts have to be paid or you'll run into arrears, thus you have little or no control over them. So once these have be paid a spending limit should be set out for controllable costs i.e. the costs you do have control over, such as food, clothing, saving accounts etc. These set amounts should be realistic and should not be set too high or too low. An excellent system here is to award each controllable cost a weighting, say, food can have weighting of 30 %, clothing 10 %, treats 10 %, savings account 10 % and so on. This system should be based on importance, with the most important cost being allocated the highest weighting and the least important the lowest. When the set of weightings have been allocated you'll multiply the percentage figure for each by the money left over (after each non-controllable cost has been catered for). For example, if the money left over after non-controllable costs have been settled is £1,000, with the following hypothetical weightings being applied. Food weighting 40% Savings weighting 20% Clothing weighting 15% Going out 15% Pet food 5% Other 5% Then the cash awarded to each cost can be calculated as follows. Food = 40% x £1000 = £400 Savings = 20% x £1000 = £200 Clothing = 15% x £1000 = £150 Going out = 15% x £1000 = £150 Pet food = 5% x £1000 = £50 Other = 5% x £1000 = £50 Total 100% £1000 Doing these calculations well help ensure that you don't unnecessarily overspend on your budget, keeping you away from the evil clutches of the debt collectors.
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