The Idiots Guide to Budgeting? Advice...

27col

My twin brother, who always earned more than me, said that he never had any money left to save at the end of the month. He seemed surprised when I told him that he should save first and then spend what was left. He took my advice and soon had some savings. Of course, giving up smoking helped a great deal as well. Regular savings are the secret to getting some money together. If it is done by DD at the beginning of the month the money will never be missed. Since I retired I started keeping a spread sheet of all my personal expenditure. I find that it makes very interesting reading.
My wife and I have made a habit over the years to never, ever use loans(apart from the mortgage) and a cheap car many years ago, and to pay the CC in full each month. If we could not afford to pay cash then we went without until we had saved up.
OH! Another thing. There is no such thing as a "must have".

david_hellier

benjillm wrote: »

I cannot believe the state of my finances! Im a 28 year old professional, earning 30k a year with massive bonus potential, yet I have no savings, and generally nomoney in the account at the end of the month, in short...its pathetic! I even appear to fare worse off than my flatmate, who is on quite a lot less than me!

Ive had thoughts about budgeting, with every intention of following my plans through, but im just rubbish at it! Id really appriciate some simple and 'easy to stick to' budgeting techniques to help me get on track....

Thanks, Ben

A spending diary prevents overspend. hawkish attention to exactly how much is available to spend is essential.

One of the best ways to tackle this is to use the weekly subtraction method. Firstly work out all your income. If your income is monthly then divide this by 4.33, this will give you your weekly income. Note it.

Then work out your monthly essential outgoings, but exclude food (more later). Divide this by 4.33 to give you your weekly out goings. Note it.

Take the outgoing figure from the incoming figure. This is the weekly Start amount available to spend on anything else including food.

Get any little notebook (a spending diary) and write the Start figure in it at the start of the week. As you spend or withdraw cash deduct it as you go. Try to get to the end of the week with some left in it and carry this forward to the next week and add it to the new Start figure.

Using this method ensures you do not overspend. I suggest you include food in the Start figure because the amount we spend on it can vary widely. My personal experience shows allowing a specific amount for food is impractical, however, it's up to you.

This method also requires you to effectively ignore your bank balance, because it is meaningless on a day to day basis. What you should see is it increasing steadily.

Also remember to include any OD charges, interest or other fees in the essential outgoing list, otherwise overspending will continue.

Other top tips: stop using credit cards for further spending and make FIXED repayments (by SO not DD), never the minimum.

I have an excel spreadsheet which can work out the weekly Start figure if you PM me with an email address. It also has a spending diary on another tab.