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Do you often feel that financial management is not your strong suite? Alternatively, are you, at the very least, finding yourself left with just a few pennies a month after the tax bills and other financial costs have been catered for?

It is not an uncommon scenario. Particularly if you have, family commitments that might make you feel obliged to cater for the family first - and the rest second. However with sound financial planning and a commitment to effective budgeting it is possible to ensure that those few pennies a month can be made to add up to, at the very least, a few dollars more.

It cannot be emphasized enough that the first step toward this objective is to be aware of how much you are spending on a yearly, monthly and even daily basis. This is really a breakdown of fixed and variable costs. Fixed being those that are always the same (a fixed rate mortgage perhaps), variable being those that vary e.g. food & drink for example.

Once identified, you will need to record these expenses. Computerized spreadsheets are an ideal tool for this. Expense categories can be recorded in the left most column and the 12 months of the year in 12 adjacent columns to the right. On the far right, the sum feature in a final column can add up all the expenses recorded in the 12 months and calculate a current yearly total for each alongside the monthly totals. This can also be produced on paper but will have to be calculated manually.

Such a spreadsheet will prove to be your flexible friend. It will give you a clear idea of how much your fixed and variable costs amount to each month and year.

You will be able to compare expenditure in relation to income. Simple expenses divided by income * 100 calculation will calculate your expenses as a percentage of income. Take the figure away from 100 and you will be left with your percentage remainder. I hope that your percentage remaining will not be too low!

If, however, you find it below any figure you deem inappropriate; action must be taken to reduce your variable costs. Set yourself a realistic percentage target to retain each month and work towards it. I would advocate watching the food bills, as you will be surprised by how this can be cut by taking full advantage of supermarket deals. Consider the pound a day trick, whereby you ensure that $1 a day is saved and put into your personal moneybox. This will leave you with a good $365 for yourself by years end!

If you really want to save, then a good interest bearing savings account might be for you. Invest in this and aim to build up a fund for yourself, hopefully with the reduced costs made possible by your budgeting spreadsheet. Good luck!

Learn more about this author, Matthew Adams.
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