Simply understanding your monthly income and living expenses budget is not enough to keep your finances under control and achieve your money goals.
You must now learn how to better manage your spending so that you do not go over your living expenses budget. If you overspend, then there will never be enough money to meet the goal you have set for paying off debt or saving each month.
One of the best ways of managing your spending is to keep a money diary.
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What is a money diary?
A money diary is simply a record of what you spend and when you spend it each month. Each item of spending is deducted from your monthly income so that you can see at any time the remaining funds available to you before your next pay day.
A money diary gives a better understanding of the funds you have available to spend at any given period in a month than the daily balance you can get from internet banking or a cash machine.
This is because it predicts and deducts at the beginning of the month all essential expenditures which will happen in the month – even those which have not gone out of your account yet. As such, you never have to worry about spending too much because you always know exactly what is remaining to spend before your next pay day.
Starting a Money Diary
To start a money diary, the first entry should be your monthly income. Then you should immediately list and deduct from your income all of your known and essential outgoings during the month. Then deduct all the known payments to your unsecured debts during the month. If you plan to put anything aside, deduct that in the money diary straight away. You will then be left with the figure available to spend until next pay day.
As you go through the month, each time you draw cash from a cash machine or make a purchase on a card, write this in your money diary and deduct it from the remaining balance. The remaining balance is the amount you have available to spend before any further income is added.