Are you the sort of person who checks your finances regularly and knows exactly what’s coming in and going out and what you spend it all on? If not, then this article might be what you’re looking for.

The best way to gain control of your finances is to make sure that first of all you know exactly what you earn and what you spend, so a spread sheet or table is a really good idea for this. It doesn’t have to be anything complicated, you can draw it on a bit of paper, or do it in word or excel whichever you find easiest.

You’ll need to list everything you have coming in during the month, and everything that goes out during the month, so your table wants 3 columns. The first column is for the date – list down it 1st all the way to 31st. Now in column two mark in all your incoming money – so if you get paid on the 15th of the month you’d put this in the second column on the row for the 15th day of the month. Do this for all incoming money. Now on column three you want to list all your outgoings – so gas, electric, rent, mortgage, etc. Put each on in column three against the date that it goes out. Then at the bottom of columns two and three, add up the total and you will have your basic incoming and outgoings for the month.

Obviously if you’re paid weekly or 4 weekly then you may need to make your table for a whole year instead of just one month because the date you get your money each month will change. The process is still the same however, it’s just a little longer and you’ll have to put each item in for each month it’s paid, and keep a running total in an extra column of how much money you have.

Ok, so now you know when all your bills go out each month, and you know how much you spend on them. Don’t however go thinking that what’s left is yours to spend because you haven’t yet taken into account things that you might only pay once per year like car insurance, car tax etc., and you’ve also not budgeted for your food shopping, travel expenses and other daily or weekly spends.

So in order to include these things we need to do a little bit of calculation. Take all the things that you pay once per year like car insurance and divide them by 12 – this tells you how much money you need to put aside per month in readiness for them. (It’s best to over estimate a little on these things just to be on the safe side).

For working out what you pay on food shopping & other things you may pay for on a daily or weekly basis like travel expenses or petrol the best way to do it is to keep your receipts for everything for about three months so that you can see what you’ve spent over all in that time, then you can add them up, and divide by three to get an estimate of what that breaks down to per month again.

So now you know what you’re spending on bills, food, and everything else you pay out for regularly, so you can include those in your table and you will instantly be able to see how much of your income you have left over. This amount is called your ‘disposable income’. This is the money that you have for savings, clothes shopping, going out etc. If you can, it’s best to now divide this into two, and put HALF of it away as savings. This will give you something to fall back on if the washing machine breaks down, or you need money for something else you’ve not budgeted for. The other half is money that you can spend or save as you choose to.

What do you do if after you’ve looked at your budget spread sheet your outgoings are as much or more than your incomings?

This is the reason that a lot of people decide they need to start looking at their finances and there are things you can do. The very first thing is to look and see what can be cancelled – If you can’t afford your Sky TV, or your Gym subscription, cancel them, with them out of the picture, you can look again at your finances and see how you stand and if things are now manageable (once your back on your feet financially you can always look again and see if you can re-introduce them). Then you can look at each of your outgoings in turn and see if they can be reduced in any way. Can you change to a different supplier for your insurance or your internet and save some money for example? If you set aside some time every month to check on your finances you can tackle one of these every month and often find particularly if you’ve not done it in a while that you can save a few £’s on quite a number of these things.

If you do have extra money to spare that you can use and you have debts to pay off, think about the best place for it. If you have credit cards or loans, look at the interest rate that you are paying on each one, and pay off the highest first. That doesn’t mean stop paying the others, but if there’s extra then pay the highest interest ones first.

If you’re going to be saving your money, think about where you save it and look at what sort of account you can take out. There are lots of banks that do mini ISA accounts now, and on those you won’t pay any tax on your savings, but with many of them they work just like a regular account and you can pay in and take out money when you want to as long as the amount you pay IN isn’t more than a specified amount over the whole year (don’t forget this is the financial year so it runs from April to April, not January to December).

Something small to remember is if you’ve budgeted monthly and pay water rates, you normally only pay these over ten months of the year, so why not put this amount either to paying off a debt or into the bank as savings on the ‘spare’ two months.

Hopefully you’ve read this and are now ready to take a deep breath and have a go at this yourself, don’t put it off, the longer you put it off for, the more likely it is to get further out of hand, and once you do start doing the above things, you will find it gets easier and easier.

by Vialdana