Managing money in three easy steps

I’ve always been careful with money but since only having one income and becoming a single mum, I have to be even more careful with the budget.  I have three ways of budgeting and I recently shared them with my sister who, won’t mind me telling you, was constantly going overdrawn and being charged for it.  Since we sat down for an hour and I told her my three ways of managing money, she hasn’t been overdrawn (even with Christmas to buy for) and has enough money for treats.

There is nothing magical in what I do, it is simply about being organised.  In the hope that I may be able to help others, here are my three ways to budget.

1.  Write down all expenses and outgoings.  I use a spreadsheet so that, if I need to change anything, I can do it easily without crossing things out.  On the spreadsheet, I list all monthly bills, such as rent, Sky, gas and electricity.  I also list all the weekly bills, such as food and petrol.

It is also important to put savings in for yearly costs such as the mot or car tax, so that there is not a shock when it arrives.  I work out the annual bills, then divide by 12 to calculate how much to be aside each month.

It is also important to include an amount for ‘Other’ or ‘Treats’ in the weekly budget.  You may feel that you don’t need these but this figure will pay for things like going for coffee with a friend, buying some new socks or gloves etc.  Without this row in your budget, you will be short when each time you buy an extra.

When the income is included, it should be at least the same as the outgoings, if not more!  If it isn’t, then the outgoings may need to be reduced.

Here is an example of a simple budgeting spreadsheet (not mine)

budget spreadsheet

 

2.  Keep a cashbook up to date.  Write in the monthly bills at the beginning of each month, the cash that you will use for the weekly bills and income.  Although it doesn’t all go out at the beginning of the month, it ensures that you will have enough in the account to pay everything.  Anything extra that is spent, must be written in so you always know how much is in the account.

This is an example using the spreadsheet above:

managing money

When the bank statement comes, I simply tick off the transactions in my cashbook.  It should all match and there shouldn’t be any nasty surprises.

3.  Place weekly cash in envelopes.  Take out your weekly spend in cash.  This way it is easy to see exactly what you have and you don’t use any more funds in your account than you had budgeted for.  We’ve all been there.  Spent more on a debit card than we had planned to and blown the budget.  This prevents that.  But if you do use a debit card, make sure that you write it in your cashbook so you don’t spend more than you have in there.

I place the cash in envelopes that are labelled up so I don’t use more than I have budgeted for each bill.

weekly envelopes

This might seem like a lot of work but it really isn’t once you start.  In fact, it makes life easier.  You know how much you have to spend on each bill each month/week and how much you can treat yourself with.  As you know how much money you have in your account and how much you have spent, there shouldn’t be any nasty surprises.

Happy money managing and budgeting 🙂

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9 Comments on Managing money in three easy steps

  1. martyn
    September 25, 2015 at 10:15 am (2 years ago)

    Great post. I use the envelope system and it works very well. I’m pretty good at saving money and using it appropriately. Saying that though life usually does throw reasons at me to spend money. One day I’ll say it worked and I’ve saved. Thanks for linking up with us on the #bigfatlinky hope to see you there this week
    martyn recently posted…Far from BoringMy Profile

  2. Katie
    March 8, 2015 at 10:04 pm (2 years ago)

    I have used a form of the envelope system on and off for years. A very handy simple yet effective method of keeping track of your cash. I really should look into spreadsheets as I use a mix of cards and cash over a few accounts but numbers make my brain cry (literally) and find them really intimidating! Thanks for linking up with #SundayStars x
    Katie recently posted…My Sunday Photo ~ ExhaustedMy Profile

  3. Ashley @ When the Dust Settles
    February 26, 2015 at 9:44 am (2 years ago)

    I am terrible with money. my problem is that if I have spare I spend it and when things are tight I want to eat junk food! But when times are tough I agree you have to keep such a close eye on things, the best way we found to manage was meal planning, it stopped us buying too much, stopped us needing to hit the shops and then impulse buy and stopped the not having anything in and thinking takeaway instead, you can also plan a few meals without meat then (always the biggest cost on a weekly shop).
    Ashley @ When the Dust Settles recently posted…Viking Coastal Trail WalkMy Profile

  4. rachel
    February 18, 2015 at 7:59 pm (2 years ago)

    When i go shopping on a budget i always withdraw cash – its real money right in front of me, once its gone its gone. I could easily spend more if i used my card!
    rachel recently posted…Great Ormond Street Hospital’s final resultsMy Profile

  5. Katy {What Katy Said}
    February 13, 2015 at 9:04 am (2 years ago)

    When I was on a really strict budget I used to withdraw the money for the week. It is such a good way to realise exactly where your money goes!!
    Katy {What Katy Said} recently posted…Dressing the Girls for Spring/SummerMy Profile

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