Setting a budget is the crucial first step to saving more.  To start you need to work out your current spending. You can do this in spreadsheet online, but I prefer my sheet of paper. Call me old fashioned, but l like to be able to refer to my budget any time without having to switch on the computer.

Looking at your current account and credit card statements is a good way to start. You can also look at recent bills and receipts.  However, you also need to add up the small amounts you are spending in cash, so a small notebook is great for jotting down any cash spending over a month.

Don’t forget to add irregular expenses such as holidays, days out, weekends away, eating out at restaurants, going to the pub, hairdressers and Christmas and birthday gifts.

I’ve listed some typical budget categories below to get you started, but you may have some different expenses:

• Rent/Mortgage
• Council Tax
• Water Rates
• Home Insurance
• Central Heating Maintainence/Breakdown Cover
• Landline & Broadband
• Gas & Electricity
• Home Maintainence & Repairs
• Mobile Phone
• Dentist: Toothache can be expensive
• Food
• Clothes
• Transport: Running a car & public transport
• Travel & Leisure: Days out, restaurants, short breaks, holidays & gifts
• Savings: For a rainy day, retirement, moving home & university fees
• Loan Repayment (excluding mortgage): Credit card balances & personal loans

Once you’ve worked out your current spending, you are ready to look at ways of reducing your expenditure and working out a new budget which I’ll examine in detail in future articles.

My Articles on Budgeting

Working Out a Budget(2): Essential Spending

Working Out a Budget (3): How Much Should I Save

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