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Day Six: Soaring High Timeline

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So far, we've got a handle on our finances and know exactly what we owe and we have a plan to stick to. Clearing your debts and being back in charge of your finances is a powerful feeling, but sometimes it's hard to work out how to stay above the clouds.

Day Six: Soaring High

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You don't want to fall back to the ground especially after doing so much to soar so high, and you'll rightly want to avoid having to deal with mounting debts.

We talked about the importance of budgeting on Day 4. As debts reduce, it's always wise to keep track on where you are financially. You can do this by regularly revisiting your budget to make sure it's still accurate. 

Remember to use the Budget Planner to help you keep track every time you feel something has changed with your circumstances.

Disposable income:

Cabot Financial states that disposable income is the amount of money that you and your family have available for spending and saving after direct taxes (such as Income Tax, National Insurance and Council Tax) and all outgoings have been deducted. It includes earnings from employment, private pensions and investments as well as cash benefits provided by the government.

The key to a good budget plan is to subtract your total regular outgoings from your monthly income and what's left becomes your disposable income, if any is left.

Once you have set your budgets, it is key that you stick to them otherwise all that hard work would have been for nothing. Granted, there will be times when you will spend a little more than your budget allows and there may be weeks when you have a little left over. If there are more weeks where you are over-spending than under-spending, you may want to re-budget.

It is all about keeping that balance and planning ahead. For example, if you are planning on going on holiday or saving for Christmas, you should try to think in advance, be thrifty where you can and always trying to stick to your budgets.

You might also want to consider saving some of it. Ideally you want to be in a position where you have 3-6 months' income saved in case of an emergency according to the Money Advice Service

Tomorrow is the last day of this series. To help you keep floating high, we've created a seven step guide to help you continue mastering your finances.

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