Making a budget is the best thing you can do
I’VE said before that putting together a sensible budget is the single most important thing you can do when it comes to managing your money successfully.
I would go so far as to say that you can’t manage your money properly unless you have a budget and use it daily to track every single bit of your income and spending.
You should start one today. And you should keep it going religiously for at least a month.
Start with your expenditure. You need to keep an absolutely accurate note of absolutely everything that you spend.
From a cup of coffee on the way to work in the morning to your lunchtime sandwich and a sneaky wee Pinot Grigio before you get the train home.
Add it all up at the end of the month, then factor in all of the direct debits and other payments that have come out of your bank to get a picture of your total spending for the month.
Then compare that figure to your income. If your income is higher than you’re spending then everything is in the right place, and you’re able to start saving some of the excess.
That means you will have money to pay for the other expenditure you have once or twice in the year such as holidays, Christmas and birthdays.
If your expenditure is greater than your income then you have a bit of work to do.
Is there anything you’re spending on that you don’t need to spend? Or that you could get at a better price elsewhere?
Look at all of your regular expenditure and apply that test – whether it’s your mortgage, your house insurance and car insurance, or the amount that you spend every month on a package to let you watch your favourite TV programmes.
It’s only when we have an understanding of each of these issues that we will truly be able to say that we understand our money and how efficiently we are using it.
And it’s amazing how much money we can free up to add to our budgets every month once we start to engage in detail with the way we spend.