We all know we should be budgeting to take better care of our cash, but so few of us actually do; it’s like eating your 5-a-day.

With our paycheques frozen and jobs market stagnant, monthly budgeting is essential in effective money management. It’s easier than you might have thought to create a family budget – and you don’t need to be a maths whizz or financial genius.

Here are our top tips for creating and making the most of a monthly budget:
1. Categorise your expenses

First things first; you need to categorise your expenses, so you can identify where you need to spend every month. Start by breaking down your spending into categories such as bills, leisure and commuting.

Identify how much each expense is set to cost you, to see how much cash you’re left with at the end of the month. If you’re not sure where to start, there are a whole host of free, online calculators that will do the hard work for you.
2. Identify your spending

Keeping a spending diary is a great way to record your spending, and help you create a more informed budget. This might seem like an extreme way to create a budget, but it is the most honest way to work out exactly what you’re spending.

For instance; you might be classing your weekly supermarket shop as a single expense. But have you accounted for the lunch you buy at work, the chocolate bar you get in the gas station, and the coffee you grab with friends on a Sunday?

Over the month, these expenses will really add up and are completely unnecessary. When you track your spending in this way, it is much easier to see where you can make changes and cut your spending quickly and easily.
3. Create a robust plan

Once you’ve categorised your outgoings and identified how much you’re actually spending, it’s time to create a robust monthly budget. Start with your income and work down. Budget for your bills (and leave a little extra room in case you need to), and all your other expenses; giving yourself a daily, or weekly spending limit will help you stick to your new routine.

When you’ve spilt your money across all your essential expenses, the figure you’re left with is yours to play with. Keep some safe for a rainy day in your savings, and spend the rest wisely. The point of budgeting is to make sure you live comfortably and to your means; don’t ruin your hard work by blowing everything you have left and struggling should your car break down.
4. Stick to your budget

Creating a monthly spending plan is easy. Sticking to it every month, and making the necessary changes, is the hard part. If your outgoings exceed your income though, you need to make some drastic changes to your spending to avoid slipping into dangerous levels of debt.

Sticking to the budget you have painstakingly created is the best way to make lifelong changes to your spending habits. Breaking any bad habit isn’t going to be easy; but this is the best way to make real changes that will make a real difference.…

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