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Simple guide to budgeting and managing your money

Simple guide to budgeting and managing your money

Changing your attitude to think about your money in terms of what you do have as opposed to what you don’t is the key starting point to getting on top of your finances. If you have a job but are living beyond your means i.e. always broke, this is the first thing you must face, you are spending more than you earn, if you want to alleviate all the stress and worry that goes alongside this kind of lifestyle choice.

Committing yourself to regular monthly payments for stuff is the first mistake we make, eroding all your personal choices because before you know it all your money is already spent, accounted for before you’ve even been paid. This kind of behaviour and thinking also keeps many of us trapped in jobs we hate just to get by………….not very smart.

First Things First

Divide your life into these categories

  • Rent/Mortgage: you have to live somewhere and even if this out going can be reduced in the medium to longer term it is something that must be paid right now.
  • Debts/Monthly commitments: this includes everything from credit cards and loans, car payments, utilities, cable TV, phones, monthly subscriptions.
  • Luxuries: everything else including food and petrol.
  • Cash: all the money you have spent but have no idea on what.

Now take out your last six months bank statements. If you don’t keep them your bank will happily sent you copies or sign up for free online banking and access your account over the internet. You must go through every transaction month by month allocating each amount to one of the four categories.

The truth is getting out of a financial hole cannot be done overnight. The debts and behaviours that have caused the problem have happened over time and will take time to rectify. By gradually taking control of the spending choices still within your control and creating some financial breathing room your patterns/behaviours will change and your stress/worry levels will decrease.

Now you have it in black and white your lists will look something like this.

Rent £450
Debts/Credit Cards
Bank Loan £120
Credit Card 1 £50 (minimum payment)
Credit Card 2 £35 (minimum payment)
Sofa repayment £10
Car Payment £120
Insurance £40
TV license £12
Cable TV £30
Phone/Broadband £25
Mobile £20
Gas and Electric £75
Food £300
Petrol £100
Clothes £50
Other Grooming £20
Pets £30
Entertainment £100
Holidays £60
Unaccounted For Cash
Total £220

Balancing your books is brutal but can be done by taking decisive action. Remember why you are doing this; for a better, happier and less stressful life. The truth is, you must not spend money you haven’t got if you really want to enjoy your life. It’s as simple as that so the questions to ask yourself now are what to do next? and how to face and embrace the changes?


You have to live somewhere and very few of us are lucky enough to live rent free so this expense must come out first every time and there’s not very much you can do about that. If you own your house i.e. pay a mortgage, you could rent it out and find somewhere cheaper for yourself/your family until you get back on your feet or think about renting out your spare room to increase your monthly income.

Debts/Credit Cards and Monthly Outgoings

You’ve got to pay your loans, monthly commitments/subscriptions and credit cards and our best advise is to cut this list back totally wherever you can in the short term to free up monthly income in the medium to longer term. Cable TV and your home landline and broadband must go. Get a pay as you go dongle instead if you really need internet access at home. It may be hard at first but is not for ever. Remembering why you are doing this is the key to remaining strong and focused.

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