#17 Don't be bad at budgeting!

by Jane Baker on 31 July 2009  |  0 comments
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Today's 'what not to do with money' rule is pretty basic, but easily forgotten.

Today's 'what not to do with money' rule is pretty basic, but easily forgotten.

#17 Don't be bad at budgeting!

When I first started my 'what not to do with money' blog, I kicked off with this post #1 Don't spend more than you earn. It's a pretty fundamental rule, but one which I don't think can be reiterated enough.

But I think my blog is overdue a spot of advice on budgeting, so that's what I'm going to look at now.

Trying to be good with money is all very well, but if you haven't got to grips with the art of budgeting, your chances of success are pretty slim.

I think most budgeting problems can be resolved in these 5 simple steps:

1. Keep a spending diary - I know you've heard it all before, but do you actually note down all your purchases? I promise you, from personal experience, it's quite a horrifying when you finally discover where all your money goes!

2. Work out your incomings and outgoings - True, it's pretty dull, but if you're to have any hope of sticking to a budget, you'll need to know how much you've got coming in and how much is going out. From this you can then calculate your own personal budget deficit (or hopefully, a budget surplus!)

3. Draw up a budget based on your deficit/surplus - If there's a shortfall start thinking about making cutbacks to balance the books. Your spending diary will reveal where you tend to fritter so you can target unnecessary expenditure quickly.

4. Give yourself pocket money - I find this really helps to keep my spending on leisure and socialising under control. But remember once you've spent your pocket money for the week/month, tough! You'll have to start turning down the invites.

5. And finally, make savings wherever you can, big or small - This could mean anything from skipping your morning coffee (yawn!) to switching your energy tariff to remortgaging.

Good luck!