Budget

Creating a budget is simple if you use the method previously discussed. You can collate the information from your monthly analysis to discover an average spend for each of the topics that you have found.

You could create a formula adding all the months petrol costs, for example, and then divide it by how many months you evaluated which will give you the average spend on petrol per month. Do this for all of the topics and then if you want to reduce your spending you can then work out which ones are realistic to cut down (for me Petrol costs are travelling to uni and work and so there isn't much room for reduction, however food and drink could be reduced).

These can be targets that are reduced by 10% or so and then reduced further if needed as you don't want to squeeze too much too soon.

Then you can create a column next to the other one probably best to start in D, in line with the relevant row input the formula =B7*0.9

In this example it would reduce the average petrol cost by 10% and so this would be how much you could spend per month which if done across all of the topics then you would be reducing all costs by 10%, so instead of spending £380 per month it would be £352. Some might be able to make quite a bit of saving and so be much better off per month. This is a good example of poor money management because they have spend more on average per month than they make, which would mean they are either in debt or losing savings.

Budget set-up

In order to create an effective personal budget you need to have planned it and then collected the data you can then use to make it achievable and reliable.

You can manage your money if you use either cash and/or card. Personally I think that using cash would limit me to spend less, however tracking what I spend and when is so easy with online banking and that is how I have chosen to operate in order to set up a budget.

This will discuss the online banking way to set up a budget.

First you can get your monthly statements downloaded from your bank online, save them as CSV (Comma delimited) which should open in Excel. I then copy the information from this file to a previously saved file which is used as a monthly cost analysis spreadsheet.

The best thing to do is to create headings underneath the statement, sort them into Income and Outgoings. Once you have the headings and have collated them make sure they add up to Debit and Credit columns respectively. Also then you would check that the Income minus the Outgoing total equals Closing balance minus Opening balance.

These are just methods of checking you have done it right.

Once you have done this for a few months you can then use that data to create your budget.