Big budget month day one: how to plan a budget
Right, let's get started.
Gather together all your paperwork
If you've been sensible, all of your paperwork will be neatly filed away in alphabetical/chronological order. Alternatively, it may be scattered throughout your home.
Unfortunately, the first step of budgeting is to get all of this together - that includes all of your bank statements, credit card statements, pay cheques, utility bills, etc. It's hardly the most exciting of tasks, but you'll feel a great sense of relief once it's done!
Make a list of your earnings and outgoings
This is where all those documents come in handy!
If you don't have online accounts, you could use a pen and paper or a spreadsheet program such as Microsoft Excel.
Just remember that it's really important to be honest when you're doing this - don't leave anything out. Don't forget to include items such as birthday cards, presents, holidays, and your everyday coffee. It's also worth adding in an estimated cost for emergency repairs to your car or boiler. It's always better to overestimate than underestimate, so be generous. And don't forget about any annual insurance policies, such as home insurance.
Similarly, make sure you don't forget anything when you're calculating your earnings too - this can include interest on your savings, benefits, and so on.
It's a good idea to calculate this as an annual figure rather than monthly, because monthly figures can vary considerably - for example, you might be paying out for a holiday one month, or Christmas presents the next. Once you've worked this out, you can divide the result by 12 or 52 to figure out your weekly or monthly expenditure.
Once you've got a detailed picture of where your money is going, you're ready to start looking at your spending habits in detail. We'll look at how to do that tomorrow.