The two key words to do with budgeting are KNOWLEDGE and CONTROL.

Put simply, budgeting is KNOWING how much money you have coming in and how much is going out. Once you know the exact numbers you have CONTROL because you can then look at how to change those numbers for the better.

It is important to know the EXACT numbers rather than have a “vague idea” about things.

It doesn’t matter what the numbers show you even if they show you are overspending. Once you see you are overspending you can look at how to cut back.

Record your spending for a month, particularly the cash you spend. How often do we take £20 out of the cashpoint and need to do it again the next day with no idea where that £20 went?

Write everything down on paper. It’s much easier to see and therefore easier to see where you’re spending too much money.

Put EVERYTHING down; don’t ignore it because it was a “one off” rather than regular expense. It’s the “one offs” that cause the problems and there will always be other “one offs” in subsequent months too.

Try to build up a bank balance that is equal to a whole month of your regular committed spending Direct Debits (DD) etc. This means that you won’t be caught on the hop if a DD goes out early. Penalties for bounced DDs can mount up easily and this can damage not only your financial health but also your credit score.

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