Castle Finance Gives Advice on How to Budget Effectively

Creating an effective budget is something that most people don’t know how to do. There are different factors that affect how good you are at budgeting and one is the knowledge you have. Castle Finance Direct has provided you with advice on effective budgeting which you’ll find below. They’ve also added information on loans in case you’ll be taking one out in the near future.

Budgeting is about writing down all of your income as well as what you spend money on every month. Although it sounds simple, some people aren’t able to keep track of both and it affects how much they’re left with at the end of each month.

Creating An Effective Budget

Creating a Budget

To create a budget and get your finances back on track, start by writing down your income and include, wages, pensions and benefits if you’re on any. You can then make a list of everything you spend each month. Make sure you include things you only pay for once a year like vet bills, Christmas or car repairs. You can divide those annual costs by twelve so that you have a monthly figure you can set aside until the bill is due.

The next step would be to deduct the total amount you’re spending from your income. If you find that you’re spending more than you make, you’ve got a ‘budget deficit.’ Those that have money left over at the end of the month have ‘budget surplus’ and are on track to healthier finances.

Loan Basics

Most people have taken out a loan at some point whether it was for the purposes of building their credit or purchasing their first home. If you are thinking about taking out a loan, you should understand the terms of each loan so you aren’t blind-sided.

In terms of how loans work, the terms tend to be agreed on by each individual in the transaction before any commitments are made. Below, you’ll see terms that pertain to collateral, length of time before repayment and interest rates.


While some loans require collateral, others don’t. The formal terms for both are secured vs. unsecured loans. While a secured loan such as a mortgage or car loan has collateral, unsecured loans like credit cards don’t. This means that the latter would result in higher interest. On the other hand, if you fall behind on secured loan payments, the collateral can be taken back so the lender isn’t at a loss.

Repayment Times

When it comes to repaying loans, you have what’s called revolving and term loans. A revolving loan means the loan can be spent, repaid and spent again. However, term loans have to be paid back by an agreed time and you’ll typically pay a fixed amount back monthly. An example of a secured revolving loan is a home-equity line of credit. Contrarily, an example of an unsecured term loan is a signature loan.

Interest Rates

Knowing the different types of interest rates that are out there is important. For the most part, you have simple vs. compound interest and one means paying back more than the other. Simple interest is when the interest is on the principal loan. When you’re paying interest on interest, however, that’s known as compound interest. This can be much more costly overall.

Also, note that when loans have high interest rates, you’re likely to have higher monthly payments. In some cases, they may take longer to pay back as well. To learn more about healthy finances, follow Castle Finance on Linkedin.

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About Dequiana Jackson

Dequiana Jackson, CEO of Inspired Marketing, Inc., is a small business marketing coach who teaches women entrepreneurs how to monetize their message so they can make more money from their expertise. Dequiana is the author of Know Your Business: How to Attract Ideal Clients & Sell More and runs the award-winning blog,

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