Hi Sandip - I am also saving at the moment to go on a big trip around the world!
I have online banking at the moment (most bank accounts offer it), and every week I go into my account and download my bank statement into excel. I categorise each item into the following items:
Rent,
Leisure
Food
Lunch
Phone bill
Utilities
Hair cut
Leisure
Work expenses
Salary
Car
Gym membership
Obviously the categories are up to you! I will add up how much I spent during the month in each category, which helps me to identify which areas I need to cut back on. From this, I then set myself a budget for the next month in each category which will allow me to save the amount I need. At the end of each month I will compare my actual expenditure to the budget and see how I did.
This has really worked for me as it has allowed me to identify the areas in which I spend too much, and has allowed me to keep track of how much I actually spend.
I hope this helps.
I did a similar kind of exercise to Potter which identifed where I was spending too much money. For me the problem was food - I spent far too much money on food. I could go into food shop and buy everything I could buy so much more than I really needed.
I only write this because I think a lot of people have this problem, and here are some tips which have helped me:
Always make a list of what you need before you go shopping! This way you won't waste money on unnessary items.
Visit supermarkets at the end of the day, when fresh food is often marked down in price.
Look for "own brand" items at supermarkets. They are usually cheaper and to be honest don't taste much different. (Actually, I believe that they are often the same product as branded goods, just packaged differently).
Check out the ‘reduced item’ shelves - you could get some bargins!
Buying fruit / vegetables which are in season usually works out cheaper.
Fresh fruit and vegetables that need washing and cutting are much cheaper than prepared items.
Prepared meals are often far more expensive than making your own,
Packed lunches work out so much cheaper than buying them out on a daily basis.
Watch the ‘sell by’ dates as you shop. You do not want to throw away food which you bought cheaply but cannot use in time.
Here are some tips I got from Natwest bank. Some of them are actually pretty good - I hope they help!
Keep an accurate note of how much you spend for one full month. That includes newspapers and magazines, lunches, cups of coffee and drinks in the pub. Only by doing this will you be able to calculate how much your day to day living is costing you.
Try to pay as many bills as you can by direct debit every month. Apart from the fact that you might get a discount for paying this way, if you arrange for bills to be dealt with as soon after your salary is paid as possible then you will know how much money you have left for the rest of the month.
Keep a spreadsheet or list showing your monthly income and expenditure. Spread as many bills as you can over the year so that you don't have lots to pay in some months when your expenses increase dramatically. Don't forget to add in the things that you only pay once a year like your TV licence or your car insurance.
If you need extra money to cope with extra expenditure at a particular time then an overdraft might be the answer but remember to ask your Bank first. Unauthorised overdraft rates are much higher than authorised ones and you also run the risk of having bills unpaid or direct debits returned, increasing the charges you are likely to have to pay.
If you think you will need the money for longer than a few months then a personal loan might be a better option than an overdraft. Shop around before settling on the loan that offers not only the lowest interest rate but also flexible terms should you find that you are able to repay the debt earlier than you originally intended.
Don't rush into buying something just because you want it today. A store might offer you access to a personal loan or its own store card but you should go away and check out the price elsewhere, and whether there are better ways of paying for your purchase. This is especially true of more expensive items like furniture or cars.
If things get tight at anytime remember that you have to prioritise your debts. If you don't pay your mortgage you could lose your house, if your electricity remains unpaid it may be cut off. If you can't afford to pay everything at one time then you need to make a list of the most important debts.
Make sure you speak to your creditors if you are not going to pay bills. Go to them and tell them you have a problem, why you have it, and make a proposal to pay what you can when you can. It's not easy but there should be no stigma to owing money and it is really important that you are up front and honest. If you are concerned about your level of debt look at the tools in For People Worried about Debt.
Here's the most important tip. A budget is not all about telling you to stop spending money. Just the opposite in fact. It's all about helping you to spend money more effectively and in areas that you want to spend it. Use it as a positive tool to help you control your money rather than allowing your money to control you!
Hi Sandip - I am also saving at the moment to go on a big trip around the world!
I have online banking at the moment (most bank accounts offer it), and every week I go into my account and download my bank statement into excel. I categorise each item into the following items:
Rent,
Leisure
Food
Lunch
Phone bill
Utilities
Hair cut
Leisure
Work expenses
Salary
Car
Gym membership
Obviously the categories are up to you! I will add up how much I spent during the month in each category, which helps me to identify which areas I need to cut back on. From this, I then set myself a budget for the next month in each category which will allow me to save the amount I need. At the end of each month I will compare my actual expenditure to the budget and see how I did.
This has really worked for me as it has allowed me to identify the areas in which I spend too much, and has allowed me to keep track of how much I actually spend.
I hope this helps.
Hi Sandip,
I did a similar kind of exercise to Potter which identifed where I was spending too much money. For me the problem was food - I spent far too much money on food. I could go into food shop and buy everything I could buy so much more than I really needed.
I only write this because I think a lot of people have this problem, and here are some tips which have helped me:
Always make a list of what you need before you go shopping! This way you won't waste money on unnessary items.
Visit supermarkets at the end of the day, when fresh food is often marked down in price.
Look for "own brand" items at supermarkets. They are usually cheaper and to be honest don't taste much different. (Actually, I believe that they are often the same product as branded goods, just packaged differently).
Check out the ‘reduced item’ shelves - you could get some bargins!
Buying fruit / vegetables which are in season usually works out cheaper.
Fresh fruit and vegetables that need washing and cutting are much cheaper than prepared items.
Prepared meals are often far more expensive than making your own,
Packed lunches work out so much cheaper than buying them out on a daily basis.
Watch the ‘sell by’ dates as you shop. You do not want to throw away food which you bought cheaply but cannot use in time.
Hi Sandip,
Here are some tips I got from Natwest bank. Some of them are actually pretty good - I hope they help!
Keep an accurate note of how much you spend for one full month. That includes newspapers and magazines, lunches, cups of coffee and drinks in the pub. Only by doing this will you be able to calculate how much your day to day living is costing you.
Try to pay as many bills as you can by direct debit every month. Apart from the fact that you might get a discount for paying this way, if you arrange for bills to be dealt with as soon after your salary is paid as possible then you will know how much money you have left for the rest of the month.
Keep a spreadsheet or list showing your monthly income and expenditure. Spread as many bills as you can over the year so that you don't have lots to pay in some months when your expenses increase dramatically. Don't forget to add in the things that you only pay once a year like your TV licence or your car insurance.
If you need extra money to cope with extra expenditure at a particular time then an overdraft might be the answer but remember to ask your Bank first. Unauthorised overdraft rates are much higher than authorised ones and you also run the risk of having bills unpaid or direct debits returned, increasing the charges you are likely to have to pay.
If you think you will need the money for longer than a few months then a personal loan might be a better option than an overdraft. Shop around before settling on the loan that offers not only the lowest interest rate but also flexible terms should you find that you are able to repay the debt earlier than you originally intended.
Don't rush into buying something just because you want it today. A store might offer you access to a personal loan or its own store card but you should go away and check out the price elsewhere, and whether there are better ways of paying for your purchase. This is especially true of more expensive items like furniture or cars.
If things get tight at anytime remember that you have to prioritise your debts. If you don't pay your mortgage you could lose your house, if your electricity remains unpaid it may be cut off. If you can't afford to pay everything at one time then you need to make a list of the most important debts.
Make sure you speak to your creditors if you are not going to pay bills. Go to them and tell them you have a problem, why you have it, and make a proposal to pay what you can when you can. It's not easy but there should be no stigma to owing money and it is really important that you are up front and honest. If you are concerned about your level of debt look at the tools in For People Worried about Debt.
Here's the most important tip. A budget is not all about telling you to stop spending money. Just the opposite in fact. It's all about helping you to spend money more effectively and in areas that you want to spend it. Use it as a positive tool to help you control your money rather than allowing your money to control you!