#MONEY ON MYMIND FREE#

In the current climate, budgeting has never been more important, particularly if you can add in another account called Contingency. Many people swear by this technique, lots of people swear at it too, but it truly works! If youвЂ™re spending more than ВЈ512, you cannot afford it, so you have to cut your cloth accordingly. So rather than spending ВЈ800 on a perceived ВЈ500 weekend break (ВЈ300 of which you cannot afford, but you tell yourself youвЂ™ll вЂњmanage somehowвЂќ), your Holidays account will categorically confirm to you that you have, say, ВЈ512 to spend. That way, when you look in your bank account it tells what you can truly spend that month. Those are examples, but use whatever is personal to you.Д®ach month when you get paid, you siphon the right amount of money into the Bills account, you put the right amount of money into the Holidays account, the right amount of money in the Christmas account, and so on. You have your вЂChristmasвЂ™ account and you have your вЂBig One-offsвЂ™ account. So, letвЂ™s say you have your вЂStandard BillsвЂ™ account, which is all the regular bills you need to pay each month you have your вЂHolidaysвЂ™ account вЂ“ you know you spend ВЈ1,000 a year on a holiday and thatвЂ™s about ВЈ85 a month. It involves moving things into hypothetical вЂaccountsвЂ™. Ultimately, the way I suggest people manage their money is by using a system I call вЂPiggybankingвЂ™. Of course, there are many other excellent planners out there, and IвЂ™d encourage people to use them.

#MONEY ON MYMIND FREE#

I have a tool called the вЂBudget PlannerвЂ™ which is free to use on my website вЂ“ it helps you balance the incomings and the outgoings, and factors in these big amounts, as well as the ones we tick off week by week. We need to break down those big amounts into a monthly cost, across the whole year, and add that to our monthly figures. The fact is, rarely are these costs factored into monthly spend, but they should be. They buy a new sofa every three or four years for maybe ВЈ1,000. But you know what, the average family in the UK spends ВЈ600 on Christmas, which is ВЈ50 a month. So, theyвЂ™ll look at their food bills, their utilities, their mortgage, car lease and all those things, and thatвЂ™s all good and well. The biggest problem that people have is they look across the month at what they typically pay for things. Sure, we all know what we earn, but we donвЂ™t know what we spend, and you cannot balance the see-sawing budget without being clear on both.Д«udgeting also leads us to make many assumptions. The challenges that come about where budgeting is concerned is a 365-day thing, and the realities of managing our money are not aided by this simple fact вЂ“ many people are appalling вЂbudgetersвЂ™! In this monthвЂ™s column, Martin Lewis looks at budgeting.

HeвЂ™s the UKвЂ™s leading money-saving expert a journalist and presenter who has kept millions of pounds in peopleвЂ™s pockets as well as lifting the lid on the threats and dangers we need to be aware of as consumers.

Money on mymind