Savings Week - Budgeting

We know, budgeting is about as interesting as watching paint dry, but for many, the first step to saving money is figuring out how much you spend. By keeping track of all your expenses – that means every coffee, household item and impulse purchase, as well as regular monthly bills – you can build a picture of your outgoings and work out how much ‘wiggle room’ you have financially. 

It doesn’t matter how you record your expenses, use whatever is best for you - a pencil and paper, a simple spreadsheet, or a free online spending tracker or app. Once you have your data, organise the numbers by categories, such as bills, groceries, and mortgage payments, and total each amount. Use your card and bank statements to make sure you’ve included everything.

Useful tip – if you’re digitally inclined, smartphone apps like Money Dashboard and Emma are great ways to track your spending and stay within budget.

Now that you’ve got a budget set up, you’ll be able to see what your expenses are relative to your income. With this newfound information, you can plan your spending and limit overspending. It’s important to factor in irregular costs, like car maintenance.

The next step is to make a savings space within your budget. This could be in the form of a percentage of your income or just a set amount each month. It doesn’t really matter at the end of the day; the most important thing is that you are beginning to build up a financial safety net.

Stay tuned for Wednesday’s savings article, where we’ll look at what you want to do with your savings and why it’s important to know.