Unless you are the proud owner of a tree on which money grows then it is a very good idea to write a household budget and stick to it. Here’s why ;
– You will not spend more than you earn, meaning you will not end up in debt. This will save you a lot of worry and stress.
– You will know how much you have to spend on each area of your life, you will see where you tend to overspend and be able to keep control over it.

Before starting to write a budget you will need a months worth of bank statements. I think it is also helpful to spend a week or two writing down everything you spend money on, that way you get a realistic picture of your spending habits. Then sit down with a calculator and work out your budget following my step by step guide.

1. Calculate your monthly income.

2. Work out your fixed monthly outgoings. By this I mean things which have to be paid and do not change month in month out. In my fixed monthly budget column I have mortgage, gas and electric, water, household insurances, television licence, council tax, car tax and car insurance, mobile phone contract, and my internet providers monthly charge.

3. Work out your variable monthly outgoings, based on what you can afford. So basically take your earnings, deduct the fixed outgoings, work out what is left and divide between the other things you need/desire. Don’t forget if possible to leave an amount each month for savings. In my variable monthly outgoings column I have food, petrol, entertainment, clothing, celebrations (gifts, parties and christmas), children’s activities, holidays. I also include an amount for domestic upkeep, things such as replacing household goods and furnishings. On top of that I am saving a certain amount each month to pay for servicing and replacing our cars as needed.

4.Use your budget to guide your spending. I have a note on my phone of the amount I can spend each month on each thing. I keep a track and when the money is gone that is it, no overspending.

I would really recommend everyone complete a household budget it really does save a lot of stress. It means you can sort out your finances once and for all and get on and enjoy your life living within your means.

Sort out your finances and watch the clouds disappear.