Making a budget
A good budget is a useful tool. It's your own personal manifesto for staying in control of your cash and on the right side of the bank manager.
Each month 64% of people end up running out of cash five days before they get paid. You think you've got enough to see you through, and then it all seems to vanish in the space of a couple of weeks, leaving you with nothing to show for it. Where does it all go?
Keep track of your spending
According to the Halifax, only 21% of young people plan a budget. Watching what you spend can be a simple way of making sure you don't sleepwalk into debt.
Try keeping a note of everything you spend for a month. Chances are you'll be splashing the cash on all kinds of stuff you hadn't expected. Everybody's different, but you may find that you are spending more than you can afford on eating out, CDs, drinks, phone calls, clubbing or clothes. What's your weak spot?
The big plan
Look at your outgoings, and be realistic. Can you cut down on some of your expenses a bit? Next, make a list of all the things you need to pay for every month. Include your rent, transport, groceries, bills, loan repayments and direct debits, and anything else you can think of. Remember to include a realistic amount for entertainment and socialising. Don't force yourself to live like a hermit unless you're in serious debt.
The added extras
A good tip, gleaned from a student banking advisor, is to add 10% to your total expected outgoings. There are always unexpected extras such as birthdays, rent rises, or car repairs to pay for. This should figure most of them into your plan, and smooth over the shock of any nasty financial surprises.
The next step
If the final amount you need to spend in an average month is much more than you have coming in, then sooner or later you will need a debt action plan. It'll involve making some serious cutbacks, while looking at ways to increase your income. On the other hand, if you're lucky enough to have money left over, you can look at all kinds of saving and investment options. Provided you actually stick to your budget, of course.
Try out Money Basics' budget calculator to find out what you really need to spend money on and what you could do without, however much you want that new DVD.
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