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The first step to understanding your budget and handling your money better is taking note of everything that you’re spending money on and understanding where your spending is unnecessary. Start off by listing everything that you have to spend money on every month – bills, rent or bond, groceries, and saving – and write it all down. Once you have a grand total for all of those, subtract it from the amount of money you’re earning and see what you’re left with.

Work it out

From the amount of money that you have left over, give yourself an allowance to spend on entertainment and small luxuries. It’s probably easier to divide this by four, so that you have a weekly allowance, or you’re very likely to end up falling short at the end of the month. Is the amount that you have left after expenses simply not enough? Think about ways to cut back and save money.

Write it down

Carry a notebook with you and make an effort to write down everything that you’re spending money on, and you should begin to see patterns develop. If any particular habit is costing you too much, you’ll need to reconsider how important it is to you – you could prepare lunch at home rather than buying it, and watch DVDs rather than going to the movies.

Pushing the envelope

Really struggling to understand where your money goes every month? Try drawing out your salary and dividing it up into your various bills and expenses, then putting it into envelopes marked according to those expenses. This will help you to see what it is that takes up most of your spending, but will also leave you feeling more secure: when a bill arrives, you have the cash ready for it in an envelope.

Tags: budget, money