Once you have understood your monthly income and outgoings you can then decide what you need to do in order to keep your finances under control. You may decide that you need to reduce your outgoings or simply ensure that you stick to your budget and do not overspend on the figures you have listed.

In order to make sure you stick to your budget, you should keep a money diary. A money diary is simply a record of what you spend and when you spend it each month. This 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.

What is a Money Diary?

A money diary is a better reflection of the funds you have available to spend 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.