Budgeting Successfully
In Charles Dickens' David Copperfield, Mr Micawber famously remarks:
"Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
Of course since the mid 19th century when this was written, inflation means that Mr Micawber's figure of twenty pounds for annual income sounds a bit of an understatement! Nonetheless the principle still applies: If your annual income exceeds your annual expenditure even by a little, then your head is above water, but if it's the other way round then it's worth trying to do something about it to get back above the water.
1. The first step to budgeting successfully is to keep an accurate record of what income you typically get and what expenditure you have.
To help you do this, I have provided in the link below a budgeting questionnaire which lists typical categories of expenditure for you to fill in and then asks you to come up with some ideas for reducing your expenditure if it exceeds your income. Of course there may be items on the questionnaire which don't apply to you and your situation and there may be other items of expenditure that do apply to you which are not there, so be sure to amend the form so that it provides an appropriate record for all your expenditure otherwise it will not be helpful!
Budgeting Questionnaire
2. Once you have created your typical budget and worked out some ways in which you might reduce it, set yourself a plan.
On your plan:
(a) Set yourself targets as to what expenditure you plan to have over a specific time period, covering how much you propose to spend in each area.
(b) In setting targets allow some leeway for the fact that there may be some items of unexpected expenditure or items of regular expenditure that you overlooked initially in drawing up your list of typical expenditure.
3. After you have created your budgeting plan, try to follow it for a set period of time & monitor the results.
If you successfully stick to your plan and achieve the results you wanted in terms of getting your expenditure under control then continue with the plan unless there is a good reason to change.
If you didn't achieve the results that you wanted then analyse the reasons:
(a) If you need to adjust the plan to help you achieve your goals then do so.
(b) If the plan is OK but you didn't stick to it, then ask yourself what you can do to help you stick to it in future - can you for example, give yourself some incentives to encourage you to stick to the plan in future.
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