GAIN CONTROL OF YOUR FINANCES AND YOUR LIFE

So you think that if you have a budget you'll be able to save some money? Well, that depends. A budget that bears no resemblance to your needs and lifestyle is a complete waste of time, and you'll soon abandon it and return to your old spending habits. Your aim should be to present a realistic picture of how you will spend your money, a tool to assist you in making purchase decisions and help you to reduce your debt or create savings. Not to create a wish-list to which you cannot realistically commit.

But if you develop a budget that is relevant and designed to accommodate the things that are important to you, you will gain control of your money and that has to give you a sense of control over your life.

1. ANALYZE YOUR SPENDING
Firstly, establish exactly how much you currently spend, and where you spend it. Your rent and utilities are simple but you should keep a log of every penny; each cappuccino, each hand-out to your teenager, each newspaper and chocolate bar. Keep this log for at least a full month, and avoid keeping it over the holidays (or you'll just simply rationalize your findings as unusually high!) Keep any cash withdrawal receipts.

2. CATEGORIZE YOUR SPENDING
Take your log and carefully group all your purchases. Use categories that make sense to you, but include the basics, such as:
Rent or mortgage and household insurance,
Life cover
Utilities
Car payments (lease and insurance)
Other vehicle costs (gas, parking, repairs and maintenance)
Food (including every single purchase, even the bread and milk)
Entertainment (including DVD contracts, home entertaining, CDs)
Education (school fees, training, books and stationery)
Phone (land-line, mobile)
Children's pocket money or one-off hand-outs
Clothing
Medical (include everything from insurance to your daily vitamins)
Hobbies and sports (equipment, club subscriptions, consumables)
Gifts and donations (birthdays, charities, church)
Servicing of debts (credit card, clothing accounts, hire purchase)
Savings

Now one single month's expenditure won't tell you the whole story, but it will highlight money you had no idea you were spending.

3. ESTABLISH YOUR INCOME
Don't bother with your gross income; it's only the net take-home that matters, since that's all that's available. Sadly, you may well discover that you have spent more than you earned. But that's why you need a budget.

4. EXAMINE

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